Investigations intensify in financial dealings
In the realm of post-trade analytics, Virtu emerges as the clear favourite, securing 68% of votes from the buyside respondents. BestX follows closely with 12%.
When it comes to supplementing their E/OMS providers, a sizeable majority of 75% of buyside respondents don't feel the need for additional support. Meanwhile, 14% use pre-trade buckets, and 10% rely on third-party datasets.
The regulator-driven EU and UK consolidated tape has garnered hope from a significant contingent of traders, particularly for TCA purposes. However, some traders have expressed concerns about regulatory overreach and the role of HFT firms in the TCA space.
Trading baskets is another area where the buyside seeks more vendor support. Traders are requesting pre-trade analysis of multi-day baskets, cross-index futures trades, and ETFs, and are pleading for strategy recommendations.
Three quarters of buyside respondents stated that their TCA provider calculates alpha for them in post-trade. The desire for more transparency on all available liquidity is a common complaint, with calls for the long-overdue EU and UK consolidated tape.
In pre-trade analytics, 59% of buyside traders use vendor tools, 29% rely on tools provided by brokers, and 14% use in-house Excel-based tools linked to Bloomberg/Reuters. Brokers are the second-favourite pre-trade analytics providers, with 27% of votes.
Interestingly, just over half (52%) of traders stated that trading was not a profit centre at their firm, with portfolio managers owning all the P&L. On the other hand, 15% of traders stated that block trades were a profit centre, and 11% included cash as an alpha generator.
Cost is a distant third constraint for 25% of buyside trading desks in post-trade, while 41% identified 'liquidity' as their biggest constraint. A significant minority of 19% use broker indications of interest (IOI) or liquidity opportunities to make adjustments, and 13% use brokers in competition.
Some buyside trading desks have expressed a desire for AI integration from TCA providers to enhance analysis. They also requested features like "% flow concentrations at set pricing times", "Ease of flagging/excluding outliers where appropriate", "More dynamic and cleaner venue analysis", and "Easier tagging of contingent trades".
Previous execution performance is the most common KPI used by buyside firms to adjust their execution and trading workflow. Some buyside trading desks have also expressed a desire for better service from their TCA vendors.
The top 5 preferred post-trade analytics providers among buyside firms are not explicitly listed in the available search results. However, FactSet Research Systems, a significant financial data and analytics firm with strong demand from wealth and institutional buy-side clients, could be a key player in post-trade analytics for buyside firms.
In the pre-trade analytics sphere, Virtu is the favourite provider among buyside respondents, with 45% voting for the vendor. One trader suggested that FIX tags consistency should be driven by clients and TCA providers.
Buyside traders from firms with trillions of dollars in combined AUM have shared their views on workflows, KPIs, vendors, and pain points in pre-trade and post-trade buyside equity trading. The findings provide valuable insights into the current state and future direction of the buyside equity trading landscape.
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