What are the key challenges for fixed income participants in terms of Best Execution?

Clients struggle to measure execution quality in fixed income because it’s complicated and there is a lack of transparency. The fixed income universe is very large, and each instrument is unique. Few bonds are quoted and traded on a regular basis. Historical data is heavy and hard to work with, and it can be very expensive to accumulate.

Can you outline ICE’s approach to its FI BestEx and TCA services and explain how clients benefit?

There are two difficult elements to overcome: How do you create a high-quality scoring method for the different types of fixed income securities in the marketplace? And how can one process a list of trades or a trade blotter to score each trade quickly and efficiently? ICE’s solution must accommodate pre-trade and post trade use cases.

After analyzing the ICE Data BestEx results, clients can gain insight into their execution performance, trading costs and can use this information to help manage their fixed income order flow. Clients may use the data to identify trade exceptions, trading trends and support and defend trade decisions.

How can a post-trade BestEx process help to inform clients’ future trade decisions?

Clients can gain insight to execution quality across their counterparties based on a variety of factors, including security type, industry, trade type, trade size, liquidity profile. Clients can rigorously review all their trade activity, identify outliers or exceptions and review overall trends.

This level of analysis gives clients insight that can help inform future trade decisions while protecting against information leakage. This service helps support trade decisions and may be used to help demonstrate fulfillment of best execution obligations.