Overall, I don’t undersatand what the solution has stated. On the other hand, implementation shortfall strategy = use of an electronic crossing network ?
IS basically identifies the costs relating to implementation of an intended trading of stocks. If you have read thoroughly it says IS tends to trade early in the day so as to reduce costs relating to missed/delay etc… So basically what we are trying here is that trade early to minimise cost associated with implementation. But during the process you might pay high costs - trade maket orders, explicit cost etc and do not delay. But the answer on pg 64 seems to suggest a balance. You trade early and incur huge costs, or delay and use ECN to reduce costs which might offset delay costs etc. just a balancing betw trading early or use ECN and reduce costs. These 2 are not substitutes but the intention is to reduce costs, in this case use ECN.