Trade Strategy and Execution – Part II (2025 Level III CFA® Program – Reading 24)

Master Trade Strategy and Execution – Part II for the 2025 CFA® Level III exam. In this AnalystPrep lesson, Professor James Forjan covers Reading 24 and explains how portfolio managers evaluate trade execution, manage trading costs, select execution strategies, and achieve best execution across different asset classes. The lesson covers implementation shortfall, trade cost analysis, execution benchmarks, best order execution, equitable allocation, trade policy, and key considerations for equities, fixed income, derivatives, and currencies. What You'll Learn: ✓ Compare trade execution characteristics across equities, fixed income, exchange-traded derivatives, OTC derivatives, and currencies ✓ Understand high-touch agency trading and algorithmic execution ✓ Understand liquidity, transparency, and execution considerations across markets ✓ Identify explicit and implicit trading costs ✓ Understand implementation shortfall and its components ✓ Calculate implementation shortfall and express it in basis points ✓ Understand opportunity costs, delay costs, trading costs, and fixed fees ✓ Learn how to minimize opportunity costs through appropriate execution strategies ✓ Understand Trade Cost Analysis (TCA) and how it evaluates execution quality ✓ Compare different trade execution benchmarks ✓ Understand arrival price, market-on-close, market-adjusted, and other benchmarks ✓ Apply beta when evaluating market-adjusted execution costs ✓ Understand trade policy and best execution requirements ✓ Identify the factors that influence optimal order execution ✓ Understand equitable allocation of executed orders ✓ Learn how firms handle partial executions and trade errors ✓ Understand governance, compliance, fair dealing, and audit trails in trade execution ✓ Review regulatory considerations affecting best execution ✓ Understand broker and execution venue selection ✓ Review asset-class-specific considerations when executing trades Chapters: 00:00 Introduction to Trade Strategy and Execution – Part II 02:19 High-Touch Agency 03:46 Comparing Markets and Asset Classes 06:55 Fixed Income 09:08 Exchange-Traded Derivatives 10:12 OTC Derivatives 11:01 Currency Markets 12:42 Trade Costs 14:10 Implementation Shortfall 15:28 Components of Implementation Shortfall 16:17 Managing Opportunity Costs 18:05 Implementation Shortfall Example 20:20 Opportunity Costs and Fixed Fees 22:00 Expanded Implementation Shortfall 23:04 Trade Cost Analysis 25:21 Trade Execution Benchmarks 26:55 Trade Cost Analysis Example 31:27 Governance and Trade Execution 34:30 Best Order Execution 36:46 Equitable Allocation 38:38 Optimal Order Execution 39:22 Trade Rationale and Regulatory Considerations 42:00 Asset-Class Trade Execution Considerations 44:48 Broker and Execution Venue Selection 45:19 Mini Quiz Study with AnalystPrep: CFA Level I:https://analystprep.com/shop/cfa-leve... CFA Level II:https://analystprep.com/shop/cfa-leve... CFA Level III:https://analystprep.com/shop/cfa-leve... Follow AnalystPrep for more CFA® and finance education content: Facebook:   / analystprep   Instagram:   / analyst_prep   LinkedIn:   / analystprep   #CFA #CFAExam #CFALevel3 #CFALevelIII #CFAStudy #CFAExamPrep #PortfolioManagement #TradeExecution #TradeStrategy #ImplementationShortfall #TradeCostAnalysis #BestExecution #TradingCosts #AnalystPrep