Best Transaction Cost Analysis Provider: New Change FX

Measuring outcomes in business is paramount and an easy decision to make in itself. The hard part usually comes when settling on reference points to measure outcomes against.

This is the conundrum that foreign exchange market participants have been particularly mired in, largely due to the unique structure of the market, where a standard and all-encompassing reference point has never existed, despite years of efforts to bridge the gap.

So it comes as no surprise that while the need for transaction cost analysis (TCA) in FX is universally understood, the industry has yet to reach a consensus on a standard benchmark for measuring execution quality against.

"We think it's crucial to measure on independent data, because then you make those comparisons on a uniform basis," says New Change FX founder and chief executive Andy Woolmer.

We are very pleased to have won – it's a testament to the team we have at New Change
Andy Woolmer, New Change FX

New Change FX was voted the winner in the Best Transaction Cost Analysis Provider category at FX Week's 2016 e-FX Awards, due to its recently launched TCA tool, which uses the independent, real-time mid-point reference rate as a basis of analysis.

"We are very pleased to have won – it's a testament to the team we have at New Change. I think we won because we've insisted on the importance of independent millisecond data and on the point of not being conflicted in what we do," he adds.

The firm offers TCA on forwards, non-deliverable forwards and restricted markets, and it rolled out its Excel-based spot FX TCA tool through Microsoft this year. This allows clients to evaluate their executions without sending data to a third-party provider or having a direct relationship with New Change FX.

"We are focused on the importance of data security; we think it's very important you don't pass trade details out of your secure infrastructure. All of our TCA tools are built in Excel, so as to be convenient, secure and simple for clients to use," says Woolmer.

State of independence

He says the company remains firmly focused on independence, and offering data and analysis tools as a stand-alone service, rather than as an add-on to transaction services.

"People understand that if they buy their TCA from us we don't have any other dog in the game; we just offer objective measurement. We are not conflicted by wanting people to trade with us or use our platform or our algorithm," says Woolmer.

"From an asset manager's point of view, independent TCA becomes valuable, in and of itself. Clients using our TCA tools demonstrate an average cost reduction of around 50%, simply by understanding which bank or broker does what well and becoming more efficient in how they allocate business," he adds.