Report Details Framework for Asset Managers to Enhance Execution Quality
Woodbine Associates , the capital markets consulting firm (http://www.woodbineassociates.com), announces the release of its latest in-depth analysis of the capital markets, “Execution Benchmarking for Credit Instruments: Fiduciary Responsibility and Best Business Practices.”
The report details key elements of a Best Execution framework that asset managers, investment advisors and pension fund managers should implement to improve performance. It provides actionable analysis and insight that can immediately improve execution quality and profitability.
Focusing on the new dynamics affecting trading and liquidity in the corporate bond market, this report offers detailed analysis on the most effective methods to benchmark and assess execution quality. In seeking to help trading professionals enhance their business, Woodbine Associates details a framework firms should adopt to refine trading strategies and improve execution performance.
“Asset managers must ensure they are achieving Best Execution for their customers,” says Sean Owens, Director of Fixed Income and the report’s author. “This has become increasingly difficult due to changes in liquidity and trading. It is absolutely necessary to step back and create a framework that incorporates broad-based, objective metrics for assessing trading strategy and execution. Clients and regulators demand it. Savvy trading professionals can leverage the results to competitive advantage.”
Key points of the report include:
- Regulation and market dynamics have changed the way firms provide and source liquidity. This impacts the ability of fiduciaries to fulfill their Best Execution obligations.
- Increasing and innovative use of technology will continue. It provides a viable alternative to voice trading that must be considered in developing and evaluating trading strategies.
- Implementing a Best Execution framework with a matrix-based approach to transaction “routing” can both meet reporting standards and enhance market execution.
- Firms should strongly consider benchmarking methodologies that combine VWAS and credit spread duration analysis.
Sean Owens is Director of Fixed Income Research and Consulting. He has more than a decade of fixed income and derivatives trading experience.
