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Alternative Market Briefing

Greenwich Associates highlights increasing focus of buy side to leverage TCA for alpha generation

Wednesday, June 17, 2015

Komfie Manalo, Opalesque Asia:

A report by Greenwich Associates has found that 90% of institutional investors or equity trading desks actively use transaction cost analysis (TCA) to measure trade effectiveness, identify outliers and to meet reporting and oversight requirements, but leveraging TCA as a real-time source of alpha remains the holy grail. The findings are based on a recently completed study with 199 buy-side traders around the world.

TCA is method of determining the effectiveness of a company’s portfolio transactions. It is essentially a rating of the spread between two possible prices – and the difference between those prices is often called "slippage."

In a study called Equity TCA: Drive Toward Alpha Generation Continues, Greenwich Associates highlights the increasing focus of the buy side to leverage TCA for alpha generation.

"A combination of market structure changes and technology innovations are changing investors’ perceptions, and realities, for how TCA can be used," says John Colon, managing director of Greenwich Associates’ Market Structure and Technology practice.

Nearly 50% of equity desks globally now use TCA as both a pre- and post-trade tool with one-q......................

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