An execution policy earns its place in a trading system only if its positions, cash flows and costs can be explained after trading and controlled while orders remain live. The preceding topic chose a schedule and derived implementation shortfall. This topic turns those calculations into a repeatable review, a set of operating controls and a cumulative execution project.
The distinction between the three lessons is the time at which a decision must be made. Post-trade analysis asks what happened and whether the cost forecast was credible. Live monitoring asks what can still happen, given existing positions and orders whose final state is not yet known. The capstone asks whether an independent reviewer can reproduce the entire route from a proposed target to the eventual book. These questions share records, but they have different acceptable delays and different evidence requirements.
By the end of this note you should be able to:
- reconcile parent intentions, unique fills, cash and positions;
- distinguish a benchmark comparison from evidence of execution skill;
- aggregate costs without hiding difficult or uncompleted orders;
- reserve capacity for working and uncertain orders before sending replacements;
- define alerts with an observable condition, an owner and an action;
- rebuild a compact execution case from its event history;
- explain the evidence required to change a cost model or execution policy.
In this lesson
- Contents
- The big picture
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