Forex Trades Verification by Tradefora
Tradefora PLC is private software company founded in 2016 with innovative technology stack focusing on Best Execution. Tradefora provides Best Execution and Transaction Cost Analytics (TCA) services to clients, brokers and regulators, including RTS27 and RTS28 reporting automation portals in compliance with the MiFID II standards. Additional value-add proprietary products are offered to brokers and investment firms. We rely on Tradefora’s analytics of Best Execution and use it as an integral part of our ratings.
How it works?
Broker execution score is produced by Tradefora using batch order analysis. For each order the following information is collected and referenced to Tradefora’s Composite Index (TCI) as a benchmark to determine the quality of each executed trade:
Upon the completion of best execution verification, each trade receives a score based on the deviation percentile from the benchmark TCI. The scores can range from an Outlier, to Awesome and carry the % value for that instrument. When all the trades inside the batch are analyzed, scores are aggregated into the final score per instrument and a total Execution Score for a broker.
For any detected Outlier trades, Tradefora verifies the execution price against the available pricing data from select FX & CFD Liquidity Providers to account for the VWAP pricing and eliminate possible market impact of the order size, hence producing an objective 360 degree evaluation of the broker Best Execution performance on the Price metrics.
Tradefora’s team developed OTC industry’s first independent best execution verification tool for traders, based on the aggregated retail broker benchmark price feed – Tradefora Composite Index (TCI). It is comprised of 100+ retail FX & CFD brokers and offers benchmark pricing on 150+ most popular instruments. TCI is calculated in real-time as tick pricing updates are being pushed out to retail trading accounts, across all the connected brokers. Prices are then aggregated in near real-time composite index, producing a market reference point. In order to ensure fair market benchmark evaluation and account for raw spreads ECN accounts into the benchmark mix, Tradefora’s smart aggregation engine takes into account not just the spreads, but also the commissions, thus normalizing the index values to reflect the true average market prices and true average trading costs.
Real-time Best Execution verification
Tradefora is using TradeGuard for real-time trade verification.
- TradeGuard is one of the most popular features among the early adopters of Tradefora, including both brokers and traders.
- It works in real-time by scoring each trade against the trade blotter to determine if it was executed within the acceptable market range.
- Trade blotter is based on the Tradefora Composite Index (TCI), which is using real-time pricing from 100+ brokers across 150+ supported instruments in order to obtain an aggregated average market price.
- This market price is used as a benchmark reference point to assess the quality of trade execution.