FX: The rise of quality execution analysis

A combination of regulatory requirements and commercial imperatives are driving interest in quality execution analysis (QEA), a subset of transaction cost analysis (TCA) that is a vital component in measuring FX best execution.

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The rise in electronic FX trading activity and adoption of pre-trade and real-time analytics tools has placed increasing importance on QEA, suggests a recent report by Forex Datasource.

QEA is defined as the process of analysing pre-trade liquidity, at-trade market impact and on-the-fly strategy-change implications of FX orders executed via exchange-like market environments.

Many observers refer to Mifid II’s best-execution mandate as the main factor behind increased use of QEA, although third-party consultants and TCA providers are also stimulating demand by pushing products that help financial institutions analyse their executions and trading alternatives, according to Curex CEO James Singleton.

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