On 28 November 2017, AIMA published a new Due Diligence Questionnaire for members to use in their appraisal of vendors offering Transaction Cost Analysis (TCA) solutions. TCA is increasingly being developed to support firms in demonstrating their obligations to act in the best interests of clients under, for example, MiFID and AIFMD. The TCA DDQ supports members in investigating available products for execution analysis to compare outcomes achieved with industry benchmarks. Post-MiFID2 applying, TCA is expected to develop further in the non-equities space, where it is currently more challenging to have reliable and complete data.

TCA is, of course, not a complete solution for best execution. The FCA and ESMA encourage firms to take a holistic approach, ensuring they have sufficient policies and procedures, and systems and controls, to ensure they achieve the best outcomes for clients on an ongoing basis. It is, however, a useful tool to demonstrate best execution and support firms in monitoring and reviewing their execution policies and arrangements, including relationships with vendors and counterparties. If members have any questions, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.