Two of the obvious components of trading cost--commissions and
market impact--combined account for only 33 percent of the costs in
Nasdaq Stock Market stocks, according to an October report from
Celent, "Execution Quality in the Nasdaq Market." Delayed and
missed trades, by contrast, account for 67 percent.
In the report, Octavio Marenzi, CEO of the Boston-based research
firm, analyzed execution speeds and prices obtained at various
market makers and electronic communications networks (ECNs) to
determine which market centers provide the lowest overall
transaction cost. He also observed that best execution is not an
easily definable term, because execution quality can vary by not
just the trading venue, but the size of the order and the liquidity
of an individual stock. |
