What, who, how why, where and and when.
Frequently we’re asked about BestExHub, so in this post, Dan Mathews, Co-founder of BestExHub, explains a bit more about BestExHub, how it came about and plans for the future.
How did you come up with the concept for BestExHub?
I was in a meeting with the Head of Trading of a large institutional buy-side client, discussing the market structure and the challenges facing both the buy-side and sell-side following the publication of Michael Lewis’s “Flash Boys”. However, managing the increased order routing questionnaires was the least of their concerns. A much more significant challenge was looming come the introduction of MiFID II regulations: “With the new best execution obligations, I need to use new sets of data to consider the venues and brokers to add in my best execution policy. How I am I going to collate all the data from all the hundreds of RTS 28 and RTS 27 reports and make sense of them?”. And so they were the seeds for BestExHub.
I quickly realised this was going to be a challenge for every investment firm within the European Union, executing client orders. From the largest of institutional fund managers to the smallest of retail agency brokers.
After speaking to a wider range of firms, including trading venues, and liquidity providers, they had a different challenge on their minds. “How am I going to publish all of this data ina machine-readable format and make it easily readable? Our website is designed for marketing purposes, not downloadable big data”.
So, BestExHub had a simple mission: To be the central hub to provide best execution quality data sourced from across the market place in one format and tools that allow firms to easily compare execution performance.
What influenced the BestExHub business model?
Having worked across the industry, working for major sell-sides, trading venues and other fintech firms (or “software/data vendors” as they were known back then), I was struck how we treated clients differently on both the buy-side and sell-side. I often thought, “How is this fair?” when the value of the service is the same regardless of the user base. So, at BestExHub, we decided to do something different, and treat each of our clients equally, regardless of size.
The BestExHub business model is simple. We built a unique platform that all firms can benefit from to improve execution performance, and we also took a risk to introduce a simple, fair and flexible subscription model at a price point that is accessible to all firms – regardless of size. That business risk has paid off, with over 25 subscribers in our first year.
How big is the team at BestExHub?
Having worked for some of the largest banks and tech firms in the world, I quickly learnt size isn’t everything. In fact, the layers of bureaucracy of large firms can be a significant hindrance when innovating new products and service, so we are small and purposely so. Chris, Niki and I bring a unique mix of experience in market structure, best execution, financial regulation, technology, and data analytics. We are bound together with one mission: “to provide the best execution quality data to everyone in a meaningful way to improve execution performance.”
We automate as much as possible, building proprietary tools, and only where necessary, use offshore resources for some data entry tasks. We work efficiently with remote working, using the latest coworking technologies and of course, we leverage cloud-based data centres for hosting the platform.
Why is it important for BestExHub to remain independent?
Good question. We are independently funded, and although several third parties have approached us with investment opportunities, we have kindly dismissed them as we want to be in full control of setting our priorities, growing our service and client base. Similarly, trading venues have contacted us to partner building analytics services for RTS 27, but that would raise potential conflicts of interest. We are committed to providing transparency on execution quality performance and highlighting the good, the bad and the ugly. So while tempting, it is essential that we remain independent and not associated with a particular execution venue or broker. Our clients trust the data and analytics on BestExHub, and it’s essential nothing hinders that trust.
Where do you see BestExHub going in the future?
Towards the end of most of our meetings demonstrating BestExHub, we get asked two questions, “Do you plan to offer TCA?”, and, “Have you considered building the European Consolidate tape?”. Both are easy to answer: Our sole aim is to provide exceptional user experience providing RTS 27 and RTS 28 data and analytics with the most extensive coverage across all the asset classes nothing more, and nothing less.
Are you data rich but information poor? Trying to understand how to interpret RTS 27 reports?