FIX publishes guidelines for equities TCA
FIX Trading Community hopes to resolve the competing practices for TCA
Industry standards organisation the FIX Trading Community has published guidelines for transaction cost analysis in equities, which it says will help to create a better market by clearing up the competing methodologies and definitions currently in use.
FIX Trading Community is a non-profit organisation created to solve problems through industry collaboration and consensus. FIX is best known for the FIX Protocol used for trade messages.
To solve concerns about the lack of transparency caused by competing TCA standards, FIX polled its members. The two most important problems identified were the need to create a glossary of TCA terminology that would be widely accepted by the industry, and to define a standardised set of best practices so that transaction costs can be compared more consistently.
FIX was eager to emphasise that all parts of the industry would benefit, including the buy-side, sell-side and technology vendors. Equities was tackled first because TCA is more established in equities than in other asset classes, but FIX plans to expand its TCA work to futures and options, foreign exchange and fixed income.
“While the initial focus has been the glossary of terms, we have also provided TCA perspectives based on market structure and industry segment,” said Michael Napper, director and head of global client analytics technology at Credit Suisse. “Additionally, we have also taken the approach to recommend best practices where feasible while recognising some issues may never easily be standardised. Going forward, we will investigate the possibility of enhancing the FIX specification to facilitate the TCA data collection process.”
The FIX Trading Community guidelines for equities TCA can be seen here
