Company: Large mutual fund company with over $100 billion in assets under management
Locations: Multi-regional presence across North America
Industry: Equity and fixed income markets
Background
Fixed Income Oversight Gaps Identified by Regulators
A leading mutual fund manager with a diverse portfolio across asset classes had long maintained robust transaction cost analysis (TCA) and best execution policies for its equity trading desk. However, a recent SEC examination revealed deficiencies in its fixed income oversight. With growing AUM in fixed income strategies, the regulator required the firm to implement a more comprehensive monitoring program for this asset class.
Challenge
Internal Resistance to Fixed Income Analysis
Compliance teams often face strong resistance from trading desks when implementing TCA reporting for over-the-counter (OTC) asset classes like fixed income. In this case, despite regulatory pressure, the traders resisted deeper analysis of their executions and were slow to adapt to the new best execution reporting process.
Solution
ACA’s Transaction Cost Analysis solution, part of ComplianceAlpha®’s RegTech platform, was integrated into both the quarterly best execution review process and the trading desk’s workflow. This structured approach created a clear channel for compliance and traders to communicate and collaborate effectively.
After two years of consistent reporting, this process revealed a performance discrepancy in their largest corporate bond portfolio tied to a single broker. The reporting uncovered that one broker was consistently charging higher markups compared to peers executing similar trades in both treasury and corporate bond markets.
As a result, the firm redirected order flow to more cost-effective brokers, reducing overall trading costs in the corporate bond portfolio by 10 basis points. The compliance team was commended for uncovering the issue and protecting investor interests.
Why It Matters
From Regulatory Compliance to Financial Impact
This case demonstrates how our TCA and best execution reporting delivers more than regulatory box-checking; It drives measurable financial outcomes. The reporting not only satisfied SEC follow-up requirements, but also empowered the trading desk to optimize execution and reduce costs in one of its most active portfolios.
What began with resistance evolved into a strong partnership. Today, the trading desk is one of ACA’s most engaged advocates, leveraging TCA insights to continuously improve execution quality.
Uncovering Value Through Transparency
ACA combines regulatory expertise, hands-on support, and advanced analytics to help firms uncover hidden inefficiencies and improve execution. Our TCA solution provides actionable insights that protect investor interests and drive cost savings.
Want to strengthen your best execution oversight and uncover hidden trading inefficiencies?
Connect with ACA’s team to learn how our TCA solution can help your firm meet regulatory expectations while delivering real financial impact.