Buy- and sell-side firms and technology vendors disagree on what constitutes best execution, a new report by capital markets consultancy GreySpark Partners reveals.
GreySpark surveyed more than 70 buy-side sell-side firms and technology vendors to deliver a review of the different perspectives on best execution. For the buy side, the main emphasis is on trade price. This is in contrast to the sell-side view, where low latency and access to liquidity are considered most important. For technology providers, access to liquidity is considered the main focus for best execution.
Additionally, 67% of buy-side respondents say it is price that indicates best execution, while 64% say an overall good relationship with their broker is a key enabler for the provision of best execution.
Of the sell-side respondents, 94% see low latency and access to liquidity as their priority in achieving best execution; 69% see fulfilling client orders according to instructions as the main focus for this.
More than half of technology providers say further regulations are required around the subject of execution quality. That was a common thread in a number of responses, with David Morgan, marketing director of Global Trading at SunGard, saying: The market structure and risk management impacts of the ongoing regulatory changes are important drivers for our product development. Costs of delivering best execution in fragmented markets can be high: a key goal for SunGard is to help customers contain these costs, in particular through the use of managed services, or SaaS.
(CG)