Cost per Equity Trade (Back Office)

Cost per Equity Trade (Back Office)

KPI Details

Cost per Equity Trade (Back Office) measures the operational efficiency of equity trading processes. A high value for this KPI may suggest slow trade settlement times, high rates of trade rejection (in the event that trade details do not match), overstaffed trade settlement functions or ineffective clearing procedures. Companies with a high equity trade processing cost typically have an unnecessary number of trading touchpoints, which has a negative effect on trade processing productivity.

KPI Definition

The total cost of processing equity trades within the back office divided by the total number of equity trades processed over a certain period of time. Back office costs related to equity trading include labor, overhead and technology expense related to trade affirmation, trade confirmation, trade clearing and trade settlement.

KPI Best Practices

• Keep records of errors by type to identify root causes of trade errors and prevent them in the future
• Monitor trade cycle times and error rates and track employee performance over time
• Enforce use of authenticated electronic messages or paper confirmations to exchange standard settlement instructions

KPI Calculation Instructions Cost per Equity Trade (Back Office)?

Two values are used to calculate this KPI: (1) the total cost of processing equity trades within the back office, and (2) the total number of equity trades processed during the same measurement period. Back office trade costs include labor, technology, occupancy and overhead related to affirmation, confirmation, clearing and settlement. Do not include costs related to trade initiation, delivery, risk management or order routing in the numerator of this calculation.

KPI Formula :

Back Office Equity Trading Cost / Total Number of Equity Trades Processed