Scandinavian brokerage ABG Sundal Collier has begun using Markit’s transaction cost analysis (TCA) service, saying clients are looking for independence in TCA provision.
ABG said it could have bought in developers to create its own TCA product, but clients are increasingly demanding independent and conflict free analytics services, prompting it to examine other providers.
"Clients want an independent system for TCA where they can rely on the numbers and know they have been provided in a completely unbiased way," said Daniel Lundqvist, head of sales trading Sweden and execution global at ABG Sundal Collier.
"One important reason we chose Markit, even though there are other strong names in the TCA space here in Scandinavia, is that they don't compete with the sell-side and can offer something truly independent."
TCA and best execution have seen significant press in recent months after UK regulator the Financial Conduct Authority published a review of best execution in summer 2014, followed by publication of the European Securities and Markets Authority’s MiFID II regulatory technical standards, which also cover best execution.
Major concerns include potential conflicts of interest in brokers’ providing TCA on their own execution, as well as a lack of standardisation in TCA data and insufficient knowledge of where best execution rules apply.
"Both buy- and sell-side are thinking about the regulatory aspect as well,” added Lundqvist. “There's been a growing focus on best execution and clients need to be able to demonstrate that they have robust and unconflicted data to assess their trading performance."