The ITG TCA uses market data from 10 providers made up of some of the largest FX market makers, electronic communication networks and banks, and measures transactions against tick-level traded rates, indicative rates, fixing rates and the forward rate curve. The tool assesses trading performance and calculates implicit costs under a variety of market conditions. TCA enables buy-side FX traders to better understand the liquidity environment and manage volatility, which can help reduce trading costs and improve foreign exchange strategy.
Interest in TCA has increased in recent years after a slew of lawsuits, particularly in the US, were taken out against custodian banks State Street and Bank of New York Mellon by state pension funds for alleged fraud in the handling of currency trades.
ITG TCA for FX complements its equivalent product for equities – one of the most widely used TCA tools among asset managers globally, according to research from Greenwich Associates.