Combining Best Execution and TCA in the Fixed Income Markets

Two subjects that have received a great deal of attention over the past several years are the obligation of asset managers and order processors to ensure best execution, known simply as “best ex,” and the application of transaction cost analysis, or “TCA.” One of the instrument types where both best ex and TCA have rested very uncomfortably is fixed income. In fact, in the fixed income space, these two disciplines may have come together and spawned a whole new discipline. This TABB Group report reviews the evolution of both best ex and TCA in the FI markets and draws some conclusions, including a possible new approach to optimizing trade execution.