MutualFundWire.com: Cost Control
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Tuesday, October 5, 1999

Cost Control


Finding out the cost of a particular trading approach has typically been a time consuming project for traders and portfolio managers. Investment Technology Group (ITG) has created a simple product to calculate transaction costs in real time using its Transaction Cost Analysis (TCA) product, a new web-based research tool.

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    • A portfolio trader typically looks at their executed prices and compare them to the benchmarks, including open, closing, and intra-day prices and Value Weighted Average Price (VWAP). They later use this information to find out what the trade should have cost them and reajust their accounts.

    "There are three problems in running reports: convenience, timeliness, and relevance or accuracy," David Cushing, director of Research at ITG said. "We solved these three problems. The TCA product allows you to log onto the Web site, upload transactions to server, select benchmarks and then you choose which one of the reports you want to run. In a minute or sometimes seconds a report is prepared that provides precise analysis."

    TCA also has an aggregation feature that allows customized groupings of trades based on user-defined criteria including, broker, account and trader.

    The product, which is still in beta testing, makes it possible for traders to monitor trading cost information making the investment process better and yielding higher returns, Cushing said.

    The major user of this type of product is "institutional investors of all stripes," he said. Likely users are top buy-side firms. Specific client names were not given.


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