Cloud-based order and execution management system (OEMS) provider TORA announced the launch of its artificial intelligence (AI)-driven pre-trade transaction cost analysis (TCA) solution designed to help firms meet the best execution requirements imposed by MiFID II, coming into effect January 2018.
The new AI TCA product moves beyond traditional TCA as its artificial intelligence techniques are able to accurately estimate price slippage for trades before they enter the market.
With asset managers increasingly relying on analytics to build more sophisticated, quantitative best execution processes to comply to regulatory requirements and to gain a competitive advantage, TORA’s product is being launched in perfect timing.
The addition of this pre-trade TCA product to the TORA OEMS is also valuable to trading desks that search for rapid advances in AI technology to automate and improve the efficiency of their operations. TORA’s product enables traders to monitor costs across the lifecycle of a trade and take advantage of new insights to help improve investment decision making.
Pascal Kuyten, Quantitative Analyst at TORA’s quantitative research group, said: “This TCA solution is built upon a convolutional neural network that is trained using real time and historical data. Machine learning algorithms are used to continuously capture new order data as it becomes available. Through this feedback mechanism the network weights are adapted to reflect the additional information and thus increase the estimation precision over time.”
David Tattan, Head of European Business Development at TORA, said: “MiFID II raises the bar for traders to deliver and demonstrate best execution to investors and regulators. Automation and artificial intelligence will play an important part in helping them keep up with market complexity and a proliferation of information to process. We are very excited about the potential for this product to enhance our clients’ investment frameworks and it is an important addition to TORA’s MiFID II optimized solution.”
TORA’s artificial intelligence-driven pre-trade transaction cost analysis solution utilizes an extensive library of historical global market data to examine the core attributes of orders such as spread, volatility and volume consumption and estimate the market impact of using any broker and algo combination to help traders determine the optimal place to send their orders.
The company’s cloud-based OEMS and partnerships with Europe’s leading ARMs and APAs for trade and transaction reporting provide a way for funds to quickly transition off older OMS and EMS technology and to simultaneously overcome many of the operational and best execution challenges of MiFID II.
TORA’s offerings include in-trade and post-trade TCA solutions, available on live interactive dashboards and in blotters.