See the opportunity cost of your A-Book.
Ever wondered whether hedging a client was the right decision? Radar’s new Book Switch Impact feature gives brokers a clear view of the financial impact of moving clients between execution settings. Crucially, this lets brokers review if it was the right decision to hedge a client, or if they should have continued to B-book them. It shows the opportunity cost; the PnL an LP would have earned internalizing the broker’s hedge trades.
Moving clients to the A-Book does not have to be a one-way decision. Risk teams can use Book Switch Impact to review when a hedge may no longer be paying off and consider whether a client should be moved back to B-Book.
See what your PnL could have been
Radar can now detect changes made to a client’s execution profile and display a historic timeline showing when each profile was active, alongside the PnL the broker could have generated if the client’s risk had been retained.
Execution profiles in Radar can cover all the execution parameters a broker may change, including:
- Time delays
- Spread or markup changes
- Book depletion
- A-Book and B-Book routing choices
Book Switch Impact shows one row per execution profile. It brings the active profile, the broker’s PnL and the PnL that would have been earned by an LP if the account had been hedged during that period into one clear view. This helps teams understand the opportunity cost of each decision.
Book Switch Impact is available within each account’s Trader Details view, showing the PnL the broker could have generated by retaining the risk.
See when a hedge stops paying off
At the centre of Book Switch Impact is PnL A, an estimate of the PnL the broker would have generated if the client’s risk had been retained rather than hedged externally.
Brokers can use this insight to identify when hedging a client may no longer be the optimal choice and consider switching them back to B-Book.
Know when to switch back
Book Switch Impact makes the opportunity cost of A-Book visible.
By showing the PnL that could have been retained, Radar helps brokers decide when a client should remain A-Booked and when it may be time to move them back to B-Book.
Book Switch Impact is now available in Radar.
Book a Radar demo to uncover the opportunity cost of your A-Book decisions.
iSAM Securities (USA) Inc.
