Equiduct, the pan-European equity trading platform, has updated its OrangeLFA service that now analyses not only which trading venue offers the best price, but also takes into account execution fees charged by each of the relevant venues.
Thus the new release provides all financial players with a sophisticated tool to support their Best Execution Policy according to MiFID requirements.
In January 2009 Equiduct introduced its Orange Liquidity Fragmentation Analytics service (OrangeLFA) to shed light on the increasingly fragmented European equity market. The financial community embraced this new tool that had more than one surprise in store. OrangeLFA, for instance, revealed that the home market of a stock not necessarily always offers the Best Price and that choosing an incumbent exchange does not always guarantee a good price. Although impressed by the results, market participants pointed out that price is not everything and fees are a crucial factor. Equiduct seized this suggestion in the new OrangeLFA release.
"MiFID has been created to give clients the best possible result when trading securities in Europe. Therefore it was only logical to also open the market to MTFs (Multilateral Trading Facilities), thereby stimulating competition between trading venues for the benefit of clients. As a consequence, fees dropped and still are decreasing. Therefore, fees have become an even more important factor when analysing where an execution should have taken place for the benefit of the client. By taking into account the execution fees of each venue, OrangeLFA finally enables all market participants to know pre-trade where they can expect Best Execution," says Artur Fischer, joint-CEO of Equiduct.
Equiduct's OrangeLFA clearly shows that on the incumbent exchanges, in between 20 % to 51 % of all trades missed Best Execution when taking into account Best Price and execution fees. Nevertheless, to execute trades only on the new trading platforms does not guarantee Best Execution either. They miss the best result for the client in between 20 % to 34 % of all cases.
"This is an unnecessary monetary loss", comments Artur Fischer. "To profit from decreasing fees and find the Best Price has become really easy now with OrangeLFA showing market participants where they can ultimately find the best deal when trading European equities." To aid market participants quantify and monitor Best Execution across Europe, Equiduct offers the OrangeLFA in three different versions. Available for free is a pdf version as well as the Heatmap, an excel sheet that allows for a bunch of analyses. Both tools can be downloaded from equiduct.com. For individual and in-depth analysis the raw data can be purchased.
OrangeLFA is part of Equiduct´s Orange Market Data suite, a set of tools designed to effectively consolidate fragmenting markets, support trading decisions and improve the quality of information for all financial players. "Along with OrangeLiquidity Viewer, OrangeVBBO and Orange Compliance, our OrangeLFA can help the buy side to save money and support the sell side to boost client satisfaction and get a competitive edge," notes Artur Fischer.