Measuring execution quality in FICC markets

Measuring and evidencing trade execution quality has become critical to client servicing as well as to demonstrating ongoing compliance with investor protection regulations. A firm’s ability to do this well depends heavily on the quality of data available.  

While the various regulatory requirements for measuring execution quality vary by jurisdiction and asset class, wholesale fixed income, currencies and commodities (FICC) markets face specific challenges in achieving high standards of transparency, openness and fairness. 

This Review examines the following topics: 

  • the observability of relevant data sources;  
  • the reliability and quality of data sources; 
  • variations in data observability and reliability across different products; 
  • obligations and priorities in measuring execution quality; and  
  • a role for industry standards. 

This Spotlight Review is intended to benefit front office trade execution on the buy-side as well as within market makers, and those responsible for overseeing regulatory requirements in compliance and risk functions. 

FMSB also issued a press release

7 September 2020 

Last updated 7 September 2020