Markets Magazine

Financial Transaction Costs in the Spotlight

With regulations such as MiFID II putting execution under a microscope, here are some tools you can use on the Bloomberg terminal to measure your performance and optimize your processes.

Provide news feedback or report an error

Confidential tip?

Send a tip to our reporters

Site feedback:

Take our Survey

By Owen Minde and Stephen Mendolia

February 3, 2018 at 5:01 AM UTC

This article is for subscribers only.

This article is part of the February 9, 2018 issue of Markets.

Managing the currency exposure of a portfolio is more important than ever. In fact, fund managers are expected to increase their total foreign-exchange trading volumes to $2.3 trillion a day by 2022, from $1.5 trillion now, according to consulting company Aite Group in Boston. With best execution under the microscope, thanks to Europe’s Markets in Financial Instruments Directive II and other regulatory developments, buy-side companies are looking to transaction cost analysis, or TCA, to help measure trading performance and optimize processes.

FX, of course, is mostly traded electronically today via multibank platforms such as Bloomberg’s {FXGO <GO>}, aggregators, electronic communications networks, or single-bank platforms. Of the total notional volume traded by institutional investors globally, 75 percent is now traded electronically, up from a little more than 43 percent before the credit crisis.