TCA for equity trading reaching saturation

Fixed income TCA usage lags behind equities, but research predicts this will increase through EMS/OMS integration.

Transaction cost analysis (TCA) usage on equity trading desks has grown substantially over the past several years reaching a saturation point in equity markets, says new research.

The report from Greenwich Associates revealed TCA is currently used by 81% of equity trading desk, up slightly from 2015 when 79% of desks reported using TCA.

In comparison, TCA is currently used by just 32% of fixed income trading desks and 58% of foreign exchange (FX) trading desks.

FX TCA is ahead of fixed income in terms of buy-side adoption, the research said. This was driven by a more accessible data set for analysis and the increasing usage of algorithmic trading and electronic trading venues.

The research predicted TCA vendors like Bloomberg, MarketAxess and Tradeweb will grow significantly for both fixed income and FX, as trades flowing though EMS could provide full transaction data for TCA.

Richard Johnson, vice president of market structure and technology at Greenwich Associates, commented: “Going forward, TCA providers will win market share by delivering critical features like venue analysis, EMS/OMS integration, and peer comparison.”

Markit, Bloomberg and ITG were named the most-used vendor solutions among the study’s respondents with some start-ups such as Global Trade Analytics also entering the race. 

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