Introducing Execution-Based Finance (EBF): A New Paradigm for Markets
I’m thrilled to share Execution-Based Finance (EBF), a framework I developed to prioritize real-time cash flow extraction over traditional long-term capital appreciation. EBF uses short-term, structurally advantaged market interactions with rented capital, measured by the Cash Flow Return on Risk Rented (CRRR) metric.
This is a preview of my forthcoming paper…
Abstract
This paper introduces Execution-Based Finance (EBF), a novel framework that redefines market participation by prioritizing real-time cash flow extraction over traditional long-term capital appreciation. Departing from conventional asset management paradigms, EBF employs short-term, structurally advantaged market interactions executed with "rented" capital—funds exposed only during statistically validated windows. We propose the Cash Flow Return on Risk Rented (CRRR) as a benchmark metric, measuring performance as net cash flow relative to temporarily deployed capital. Through real-time executions in the S&P 500 futures market, we demonstrate EBF's ability to achieve consistent, high-efficiency returns with controlled risk. Contrasting EBF with traditional strategies—such as buy-and-hold, alpha-seeking funds, and high-frequency trading—this study challenges foundational assumptions about capital commitment, time, and risk in financial theory, offering a scalable model for adaptive market participation.
This methodology directly challenges the industry's reliance on disclaimers such as "past performance is not indicative of future results." Execution-Based Finance demonstrates that consistent, repeatable outcomes can be engineered through structurally bounded setups and strict capital exposure protocols. In EBF, past performance is not a coincidence—it is structural scaffolding.
