Investment solutions supplier TORA has developed a pre-trade analytics solution that uses artificial intelligence (AI) to help trading firms meet the best execution requirements of Markets in Financial Instruments Directive II (MiFID II). TORA is offering the tool as part of its cloud-based order and execution management system (OEMS), enabling traders to monitor costs across the lifecycle of a trade and improve investment decision making.
TORA says its solution moves beyond traditional transaction cost analysis (TCA) to accurately estimate price slippage for trades before they enter the market. The solution examines the core attributes of orders – such as spread, volatility and volume consumption – using a library of historical, global market data. From this, it estimates the market impact of using any broker and algorithm combination, helping traders decide the best place to send their orders. Its estimation precision increases over time, through machine learning algorithms that continuously capture new order data as it comes in, and a neural network that is trained using real-time and historical data.
David Tattan, head of European business development at TORA, says: “MiFID II raises the bar for traders to deliver and demonstrate best execution to investors and regulators. Automation and AI will play an important part in helping them keep up with market complexity and a proliferation of information to process.”
As well as the AI TCA tool, TORA offers in-trade and post-trade TCA products that are available on live interactive dashboards and in blotters. The company also supports best execution via integration with OTAS and a range of broker algorithms.