big xyt launches new trade verification tool to improve ETF execution

The move has come in response to the pre-hedging debate, according to the business.

big xyt has announced the launch of a new trade verification tool – an extension of its Open TCA solution – focused on execution analytics at both the pre- and post-trade stage. 

It allows users to rapidly verify “suspicious” trades, providing transparency and returns verification of price reversion and execution performance instantly on any trade or order.

It specifically focuses on mid-price movements, changes in spreads, and changes in volume at-touch – all both before and after a trade.

big xyt highlighted the relevance of the significant proportion of RFQ trading in Europe currently – which reached more than 50% this year – as a key driver for the tool. It said: “Trading with non-lit mechanisms (such as RFQs or Systematic Internalisers) may expose the participant to market impact and/or information leakage and thus higher trading costs”.

As a result, there is an increased need for accurate post-trade analysis to review the quality of execution and reliably understand the total cost of trades.

In addition, the need to fully understand changes in liquidity during the trading process was also emphasised, specifically criticising using the time of execution to benchmark execution performance when trading ETFs. big xyt said: “This is highly inaccurate and does not provide any information on changes of liquidity during the trading process (usually several seconds either side of the RFQ execution time) such as price movement, reversion, or the widening of spreads”.