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Implementation Shortfall (Arrival Price)
Objective: To minimize execution costs by following the optimal trade-off between market impact costs
and price risk.
By executing an order aggressively shortly after it is received, an implementation shortfall strategy seeks to
minimize price risk. An implementation shortfall strategy can be executed at a passive,
medium or urgent level depending on anticipated volatility and client preference.
The Implemenation Shortfall strategy is most effective for highly liquid names.
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