Best execution remains one of the most important compliance requirements facing trading teams. Firms must ensure their trade data is accurate and transparent while structured in a way that demonstrates they’ve taken all the reasonable steps to secure the most favorable outcomes for their clients.  

Thankfully, modern technology is making it easier for firms to manage best execution obligations. Beyond compliance, the growing use of analytics tools is giving trading teams an edge when it comes to analyzing trade data more effectively to make more informed decisions. These capabilities not only support regulatory readiness but also help to improve execution quality over time and drive measurable ROI.  

In this article, we’ll explore how the latest tools can help trading teams meet their best execution responsibilities and enhance performance in the process. Read on.  

How Do Best Execution Tools Work?

Best execution analytics tools are designed to provide investment firms and traders with the necessary data, analytics, and automation needed to evaluate trade quality and demonstrate adherence to regulatory expectations. These tools support both compliance and performance goals by helping firms assess whether trades were executed under the most favorable conditions reasonably available. These tools ingest high volumes of trading data and analyze across various relevant best execution factors, such as the price of the trade, speed, associated costs, and the probability of executing a trade, and then break down the full trading journey into an audit trail. 

Benefits of Best Execution Tools

Legacy systems, often a mix of manual spreadsheets and fragmented internal tools, can make it difficult to bring together the full picture of trade performance and compliance.  

Modern best execution analytics tools are highly useful in that they help trading and compliance teams efficiently analyze trade quality. They can provide detailed information about an order’s journey, including the timestamp of receipt, routing decisions, execution venue, time of execution, fill price, partial fills, cancellations, and associated fees or costs. Ideally, these tools can also be tailored to account for the firm’s internal trading KPIs, better incentivizing traders to achieve better results. 

These same best ex tools can also assist with benchmarking, where executed trade prices and costs are compared to relevant benchmarks. These include the arrival price, interval average price, midpoint of the spread, or the best bid at the time of order receipt. This, in turn, allows firms to objectively measure the optimization of their trades. 

Modern best execution platforms can also include outlier detection, which automatically flags trades that deviate significantly from expected benchmarks or the firm’s best execution parameters. This service can help compliance teams quickly and efficiently identify and respond. 

Conclusion

Balancing best execution compliance with trading performance is a complex challenge many firms face. It was with direct input from best execution committees across leading trading firms in the industry that we launched the next generation of Surveyor’s best execution analytics engine. With intuitive visuals, instant calculations, and a shared team view, the platform helps teams achieve their compliance obligations under Rule 605 and Rule 606 while delivering insights that drive better execution outcomes.  

Combined with our leading trade surveillance, we provide a unified solution for clearer trade insights and stronger oversight.  

Contact us here to learn how we can support your firm’s compliance and performance goals.