Trading firms look beyond equities with new analytics tools

Trading firms are looking at new analytics tools in the foreign exchange and bond markets, as new regulations increase the pressure to prove end investors are getting the best value for money on trades.

The market-maker Citadel Securities today said it had struck up a partnership with BestX, a London-based fintech startup that provides analytics on trades conducted in the vast FX markets.

Through the partnership, Citadel Securities will be provide its fund manager clients with analysis of how it executes their trades in the currency markets, according to a statement.

Kevin Kimmel, global head of eFX at Citadel Securities, said: “Quality execution and transparency are at the core of our client offering and partnering with BestX helps us demonstrate this.”

BestX was founded in January 2016 by Morgan Stanley alumni Pete Eggleston, Oliver Jerome and Aman Thind.

In May, the Bank for International Settlements published its long-awaited global code of conduct for firms operating in the FX markets. Included in it were guidelines on how to improve trade execution.

The agency broker ITG, meanwhile, is hoping to capitalise on new European trading rules aiming to bring greater transparency to the region’s bond markets.

The firm, which matches buyers and sellers of securities, is expanding its analytics service beyond equities and FX and into the bond markets ahead of the European Union’s updated trading rulebook.

The revised Markets in Financial Instruments Directive, or Mifid II, comes into force in January and will bring new post-trade reporting requirements across asset classes, including to the fixed income markets for the first time.

Mifid II aims to bring more transparency to previously opaque corners of the financial markets and the result will be more trade data for fund managers to produce and digest as they bid to secure the best prices for end investors.

Kevin O’Connor, the global head of analytics products at ITG, said the group’s new transaction cost analysis tool will help clients to “aggregate and analyse their [fixed income] transaction data no matter where they execute their trades”.

ITG’s analysis tool will gather data from the major global corporate and sovereign bond markets, with bond futures and other debt asset classes to be added in the coming months. Pre-trade analysis tools are also in the works, ITG said.

Frank DiMarco, head of fixed income analytics at ITG, said: “Our clients who are engaged in multi-strategy trading can use our product to see their true net cost of trading to better evaluate their performance.”

The move will pitch ITG, already a dominant player for transaction cost analysis in the equities markets, into competition with the likes of Bloomberg, Global Trade Analytics, MarketAxess and Tradeweb in fixed income.

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