Carrot and stick

Investors now demand pre-trade analysis about the expected costs of an asset transition, live updates about trade executions and a post-trade assessment of the quality of the work. This helps improve future transitions.

“We’ve given clients the stick so they can beat us with it,” says Andrew Dalgleish, the Sydney head of the UBS institutional funds group in Australia. “But this builds a level of trust.”

Clients want more detailed and transparent reporting about how trades have taken place and to show evidence that best execution has been achieved. “We think that you have to have a trade-by-trade breakdown of where the implementation shortfall was and what the spread was,” Dalgleish says. “That’s where the game is now,”

Real-time updates can show the effects of disproportionate volume, anomalous price movements and the actions of multiple buyers and sellers on transitions. “The fact that there is a two-way dialogue during transitions is key to preventing problems in the end,” Hammerton says.