BEST EXECUTION –
LOWER PORTFOLIO DRAG
Portfolio returns are reduced by Initial Margin, Clearing Fees, Broker Fees, Broker Margin, and Post-trade Event costs. Cassini gives you better control over these costs.
improved returns with cassini pre-trade analytics
Portfolios that hold collateralised trades such as ETDs or OTC have ongoing carry costs and these create a drag that can reduce the overall portfolio returns.
The factors contributing to this drag include:
Impact of encumbered cash
Opportunity cost of collateral assets
Best execution does not just involve the lowest execution quote, it means the lowest overall cost of a trade. That means that the trade carry cost has to be factored into execution decisions.
Therefore any Asset Manager should be looking to monitor and reduce these carry costs where possible and this involves implementing a few key changes:
Transparency of IM levels on all agreements
Ability to break IM down by underlying sub portfolio or trade strategy
Pre-trade checks to ensure new trades are executed against counterparts where the total cost of carry, what we call Lifetime Cost is minimised.
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