The Trade News. Flying too close to the sun?

"The brokers" trading tools have been developed and honed over many years. We're not looking to reinvent the wheel."

Even so, measuring execution performance against VWAP only offers an imprecise guide, according to Allen Zaydlin, CEO and president of execution technology provider InfoReach. "If I'm trading inefficiently, I'm moving the market," he asserts. "So if I'm driving the whole market up, I'm measuring myself against the result of what I've done (i.e. the higher price I created through my aggressiveness), so if I benchmark my performance against VWAP, I don't look so terribly bad."

Zaydlin suggests that the sheer variety of execution choices makes total transparency on the tactics behind the numbers provided by the sell-side next to impossible. And the effort required to determine whether a broker held on to the order too long in the hope of crossing it internally – given the cost of obtaining the human and technology resources required to analyse data on an ongoing basis – would be hard to justify in terms of savings achieved...