The consortium, called OpenTCA, has issued a consultation paper and survey designed to set guidelines for developing consistent, industry-wide standards for TCA.

The survey, which seeks feedback from buy and sell-side institutions, will remain open until October 31st, 2011. This survey is the first step to help OpenTCA create clear guidelines for understanding the true cost of transactions among brokers and liquidity destinations like alternative trading systems.

"Now, there are liquidity destinations and sell-side institutions that add a great deal of value by delivering transactions at a low-cost to the buy-side. However, it is hard for the buy-side to identify the strong performers and avoid the poor performers because there are no clear industry-accepted standards for measuring transaction costs," said Robert Kay, Head of Analytics at TradingScreen. "OpenTCA is working to address this critical problem by bringing together buy and sell-side firms to set clear standards for measurement, so there is a common taxonomy and common tools for analysing transaction costs," he continued.

The consultation paper, written in conjunction with BofA Merrill Lynch, Citi, Nomura, and UBS highlights specific areas where the value of analysis is significantly reduced in the absence of a common approach to trade analysis across fundamental components of TCA. These include the basis of calculation of commonly used benchmarks and the basis for inclusion or exclusion of venues and trades in calculating relevant market activity.

The consultation paper also makes recommendations in a number of areas. Buy and sell-side firms, as well as other interested parties, are invited to comment and offer their own ideas and suggestions in the accompanying survey. (Both are located here).

"The industry generally recognises TCA should become the cornerstone of an effective dialogue between buy and sell-side about trading effectiveness," said Kay. "However, that will only happen if there is broad agreement across the industry about what should be measured, how it should be measured and how results should be presented. Recognising its importance the four investment banks committed significant resources towards starting a process to build that agreement."