What Are ‘Transaction Cost Analysis’ (TCA) Tools Used for in Block Trading?

TCA tools are used to measure and analyze the explicit and implicit costs associated with executing a block trade. Explicit costs include commissions and fees, while implicit costs include market impact, slippage, and opportunity cost.

Institutions use TCA to evaluate the performance of their brokers and algorithms, identify inefficiencies, and refine their execution strategies to minimize overall trading costs.