Trade Processor adds separate slippage rules and randomised quote markups

Tools for Brokers announced three Trade Processor additions on 29 October: independent treatment of positive and negative slippage during A-book execution, market-depth snapshots captured during order processing, and automatically varying bid and ask markups. The changes give a dealing desk more control over the relationship between its liquidity-provider fills and the prices delivered to customers.[1]

Trade Processor connects trading platforms to liquidity providers, aggregates selected liquidity and applies execution and risk rules. Its existing product documentation describes profiles that can change routing, spreads and markups with market conditions, alongside trade-history and exposure reporting. The October controls sit within that wider execution system, rather than representing a new liquidity venue.[2]

Who receives the price difference?

TFB says the new slippage settings let brokers decide independently how much favourable price movement reaches the trader and how adverse movement is absorbed. Positive slippage improves the execution price relative to the reference price; negative slippage worsens it. Configuring the two directions separately can change the allocation of that difference between broker and customer.[1]

Consider an illustrative purchase of €100,000 against dollars with a reference price of $1.10000 per euro. A liquidity-provider fill at $1.09998 costs $2 less; a fill at $1.10003 costs $3 more. Those differences are separate from any additional markup or commission. Passing through, sharing or absorbing them changes the customer’s outcome without changing the price at which the external hedge was executed.

This is why a report on the liquidity-provider fill alone cannot explain the complete customer experience. The useful comparison is between the reference price, external fill and final customer price, with the applicable pricing rule alongside them. Trade Processor already records individual deal details and can analyse activity across platforms and aggregation pools.[2]

Quote construction and execution review

The randomised-markup option varies adjustments within configured ranges and intervals. Bid and ask sides can be controlled separately or moved together. TFB has not published the settings’ default values, a release-version requirement or measured effects on customer execution in the announcement.[1]

A change in the markup alters the broker’s delivered quote even when the underlying liquidity-provider price is unchanged. A retained depth image can help a desk investigate the prices and quantities visible around an order, but it does not by itself establish that every displayed quantity was executable for that account. The value comes from connecting that context to the order’s timing, routing and final result.

For firms subject to the FCA’s MiFID best-execution provisions, assessment includes price, costs, speed and likelihood of execution and settlement. The rules also require checks on the fairness of OTC prices; for retail clients, price and directly related execution costs form the total-consideration test. The practical consequence is that a configurable pricing control needs to be assessed against the firm’s client obligations and observed outcomes, rather than treated as evidence of improved execution in itself.[3]

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