Coming in at number 10 in our 2024 most read countdown was a major merger and acquisition scoop announced at the start of the year. As revealed by The TRADE and sister publication Global Custodian in February, fintech giant acquired SaaS post-trade platform Torstone Technology.

The deal will further bolster FIS’ capital markets technology offering, having acquired SunGard in a major deal back in 2015. The firm has also made waves through a number of other bolt-on acquisitions and landmark mandates.

Torstone is a global SaaS platform for post-trade securities and derivatives processing technology, originally built by and for a global investment bank. 

The fintech was founded in 2011 with originator and CEO Brian Collings still chief executive and chair today. Torstone is headquartered in London, with offices in New York, Toronto, Hong Kong, Singapore, and Tokyo.  

Speaking at the time of the deal, a spokesperson for Torstone confirmed that the firm was not able to disclose more detail at that stage. A spokesperson for FIS added that the firm as a rule does not comment on market rumour or speculation.

A source speaking to The TRADE, under the condition of anonymity, said: “The acquisition makes perfect sense from the FIS perspective as the vendor can add modern securities processing capabilities to its existing suite of capital markets focused offerings. On the Torstone side, it gives the smaller vendor deeper pockets to build out its capabilities and reach into new geographies.

The TRADE is renowned for its coverage of major people moves from across our industry and so it’s fitting that number nine this year in our most read stories is quant-focused role at Citadel.

As revealed by The TRADE following a post on his social media, Citadel appointed Mukunth Raghavan as head of American Treasury quants, based in New York, in October earlier this year.

As part of the role, Raghavan will serve a broad mandate across both Citadel Asset Management and Citadel Securities. He joins Citadel from Goldman Sachs, where he most recently served as vice president within the bank’s global equities team.

In an earlier stint at Goldman, Raghavan worked as vice president, quantitative strategies within the bank’s equities prime services. In this role he built analytical tools, trading strategies and optimisation models.

Elsewhere in his career, Raghavan spent three years at McKinsey & Company, most recently serving as a management consultant.

8. Goldman Sachs AM set to leverage BNY’s buy-side trading solution

And finally, coming in at number eight and concluding this first roundup of The TRADE’s most read series, is news relating to an outsourced trading deal involving some rather large household names.

News broke in March that BNY was set to begin offering its buy-side trading solution to Goldman Sachs Asset Management as the firm continues to expand the reach of its outsourced trading offering across the market.

The new buy-side trading relationship specifically concerns a division of Goldman Sachs Asset Management’s EMEA business, The TRADE understands.

As part of the agreement, BNY is delivering global trade execution services in EMEA, the US and APAC markets across fixed income, FX, derivatives and ETFs. 

BNY’s buy-side trading solutions business was launched in 2023, providing a flexible solution. As the firm explained, “outsourced trading does not have to be a onesize fits all approach, it can be customised to meet your needs”.

Currently, the offering includes a ‘partial outsourcing’ offering wherein a supplemental service is offered, as well as ‘full outsourcing’ where the firm assumes the responsibilities of the trading desk. It supports institutional clients with global multi-asset trade execution services across over 100 countries. 

Read more: The Outsourced Trading Handbook 2023

“BNY is proud to support Goldman Sachs Asset Management’s sophisticated trading needs as they grow their world class investment platform,” said the firm in an official statement.

Outsourced trading is a trend which continues to be on the rise, whether full outsourcing or a supplement to the trading desk, more factors are pushing firms towards the service.

The attention has been increasingly turning to larger managers and while for the C-suite it might be an obvious economic decision, for many on the trading desk the topic continues to be a somewhat contentious one.

That concludes this first roundup of The TRADE’s most read content in 2024. Tune back in tomorrow for stories seven to four.

The post The TRADE’s most read stories of 2024, part one: M&A, quant moves, and outsourced trading remits appeared first on The TRADE.

As part of the development, Northern Trust will provide outsourced trading primarily for Avanza Fonder’s global, emerging market, European and US equity market index funds.

Founded in 2006, Avanza Fonder is a wholly owned subsidiary of Avanza Bank Holding which provides services for private clients.

The fund company manages funds in-house and in collaboration with other managers.

Read more: Fireside Friday with… Northern Trust’s Amy Thorne

 “After opting to bring the management of our index funds in-house, we aimed to find a solution that would streamline our trading processes so we could concentrate on what matters most, which is to achieve outstanding results for our clients,” said Jesper Bonnivier, chief executive at Avanza Fonder.

“By collaborating with Northern Trust and utilising their ITS platform, we’ve gained access to greater liquidity and scale, enabling us to drive growth and consistently surpass client expectations.”

The past year has seen multiple investment managers outsource their trading to Northern Trust.

Most recently, UK-based asset manager Artemis selected Northern Trust to provide outsourced trading services for its equities and derivatives activity, effective January 2025.

In August, Northern Trust was also selected to provide outsourced trading to global asset manager Nedgroup Investments via its Integrated Trading Solutions (ITS). Specifically, Northern Trust will support Nedgroup with its new in-house multi-boutique fixed income platform.

Read more: Northern Trust tapped by True Potential for outsourced trading solutions

“We are delighted to be working with Avanza Fonder, a leading fund manager in the Nordic region, to support them across the trading spectrum through an integrated middle-and back-office solution,” said Gerard Walsh, global head of client solutions banking and markets at Northern Trust.

“Our customised services will help Avanza Fonder navigate ongoing global market challenges, allowing them to focus on managing the assets entrusted to them, whilst we work with them to effectively manage the trade and post-trade lifecycle.”

The post Avanza Fonder outsources trading to Northern Trust appeared first on The TRADE.

Amy Thorne

Specifically, Northern Trust will support Nedgroup with its new in-house multi-boutique fixed income platform. 

The firm confirmed that the premier fund on the platform, Nedgroup Investment’s Global Strategic Bond Fund, is set to feature a range of active fixed income strategies. 

Amy Thorne, head of integrated trading solutions for EMEA at Northern Trust highlighted that despite the popularity of equity outsourcing among managers, the outsourcing of a fixed income desk has remained less common.

“Recently, we’ve seen this perception shift, with a 144% growth in trade flow activity coming across our fixed income desk in 2023. Nedgroup selected Northern Trust due to the flexibility of our ITS solution which is able to scale seamlessly with the fund’s growth, as well as our broad access to liquidity networks and our bench of expert traders.”

The move is the latest in a string of entities outsourcing some part of its trading to Northern Trust. Last December, UK-based investment management firm Waverton outsourced a portion of its trading to Northern Trust Integrated Trading Solutions (ITS) with the firm supporting the trading of equities, derivatives and fixed income assets.

In May 2024, Singapore-based investment manager New Silk Road outsourced its trading to Northern Trust as it sought to fortify its offering as T+1 loomed, whilst most recently, earlier this month, UK-based wealth management firm True Potential chose Northern Trust to provide outsourced trading services across equities, fixed income and exchange traded derivatives, with coverage from multiple trading locations. 

David Roberts, head of fixed income at Nedgroup Investments, asserted: “It’s difficult to over-estimate the importance of access to market liquidity in bond fund management. Utilising the services of Northern Trust and their wide and varied liquidity pools affords Nedgroup the ability to put our theory into practice, essential when being nimble is a key component of our process.” 

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Achieving the same (or better) outcomes as trading inhouse is undeniably difficult. Buy-side heads of trading at this year’s TradeTech Europe conference explained that while of course “there will be cases for outsourcing” there are certain aspects of the trading process which are inherently convoluted and thus difficult to execute.

“Our trading group are viewed as part of the investment process with interaction and culture aligned. That’s difficult to replicate using outsourced trading,” asserted the senior panellists.

It is for this reason that only the most dedicated providers are set to reap success. Speaking to The TRADE, Dean Gray, head of EMEA outsourced trading at Jefferies, explains: “It has been well documented that the past few years have seen a significant shift in the mindset, especially of the larger funds, towards the adoption of outsourced trading. As larger funds utilise the service, other groups such as sovereign wealth and platform providers are becoming increasingly involved.

“These groups have an inherent nature of complexity that require outsourced trading providers to heavily invest in human capital and technology to meet all of their requirements effectively.”

Despite a degree of caution being exercised by the buy-side, the fact that around 40-45 firms across the industry identify as utilising outsourcing trading in some capacity, is telling. And the number is climbing.

In tandem, 50 providers are now dedicated to handling the gamut of trading needs. This is a significant reality, and a true sign that the industry is changing irrevocably.

As Rebecca Crowe, managing director and chief operating officer, BNY Markets, previously told The TRADE, “Years ago, it was the middle-office who were contemplating outsourcing and people couldn’t even consider that you would allow somebody into your books and records in that way.”

Broadly, the providers are independent firms, prime brokerages, and custodians, all with their own pros and cons, unique approaches, and distinct strategies.

The frontrunners across this space are clear to see. The next step for key industry players is now more important than ever as the gap between market leaders and ‘the rest’ seemingly widens.

Cost must be balanced with effectiveness

When it comes to outsourcing trading, seeking offerings with clear value-add and a smooth operational set-up has been front of mind for firms.

Brendan Burke, Brown Brothers Harriman’s (BBH) managing director and head of Americas FX sales and business development tells The TRADE: “Managers need to be comfortable that execution via an outsourced platform is comparable to managing the process in-house. It is important to be clear in terms of identifying activities that are in and out of scope to consider outsourcing.”

However, though execution quality is of course front of mind, the cost saving aspect is becoming an ever-more important consideration for the industry as participants are increasingly forced to juggle mounting regulatory, technological and data-related burdens.

Fees are mounting and when it comes to business strategy, this factor is demonstrably taking precedence – but at what ‘cost’?

Aaron Hantman, chief executive of Tourmaline, agrees that, despite the pursuit for quality, the decision to outsource – specifically where to outsource – often comes down to economics, explaining that in some cases this can have negative repercussions.

“If firms can receive front, middle and back-office solutions packaged as one and have to sacrifice the trading quality to get those economics they often do it,” he explains.

This can in many ways be put down to the decision to outsource generally coming from the c-suite and other senior leadership individuals – a controversial reality which many in the market have openly criticised for being an approach which omits important insight from trading teams.

“In terms of who makes that decision [to outsource] of course it is down to the people who are motivated by, and tasked with, looking at overall operating model transformation and cost efficiency – which are generally COO’s and CFO’s,” said Crowe.

She added that even when it comes to how decisions are being made as to the structure of outsourced offerings, capital considerations are commonly at the fore, specifically cost efficiency and more variability with costs.

Of course, this is an understandable reality, given the current state of the market, however, potentially sacrificing trading quality in the pursuit of capital saving is a high price to pay. Advice about cutting off noses to spite faces comes to mind, but as Hantman tells The TRADE, many times this situation arises not through any nefarious means, but because of a certain degree of naivety.

“People truly do not understand in many cases just how badly trading could be compromised,” he says. “Those who make wholesale changes without understanding the impact at the trading level will soon have to reverse out of them a year or two later.”

As firms continue to place a growing degree of trust in these providers, this should theoretically work to foster effectivity.

“Like many managed services, a provider needs to have scale and be able to deliver a quality offering combining client service, technology and trading expertise. It can’t simply be shifting trading responsibility from a manager to the provider,” highlights Burke.

The buy-side agree and discussions at conferences across this calendar year have focused on the importance of alpha retention in this space.

As one TradeTech Europe buy-side panellist affirmed: “Understanding the clients and the markets you trade is essential. You need to think of the trading desk as the engine that drives the room. Those conversations around news flow and pricing are central. An active manager needs an active desk.”

However, the crux is that this is not so easily achieved by an outsourced trading provider. Across the outsourced trading space, the barrier to entry has historically been low, but the barrier to success arguably remains high.

As Gray explains, “as the industry has begun to mature, each offering is becoming more clearly defined. The reality is many are not prepared to make the significant investments required to maintain or grow their share of the market.” 

The important impact of changing market sentiment

Demonstrably, things are ramping up and outsourced trading providers are highly cognisant of the importance of keeping up with the pack in this high-stakes game.

However, importantly, various sources speaking to The TRADE have confirmed that a shift of market sentiment has contributed to the development of this space. What started as a foot in the door, has widened into a significant entryway, with market participants – who were at one time not just hesitant, but hostile – now tuning into the importance of embracing change.

A recent LSEG and Coalition Greenwich report from Q4 2023 highlighted exactly this uptick in views around outsourced trading, wherein 66% of buy-side respondents confirmed their belief that outsourced desks could provide them with better access to liquidity, while 63% highlighted improved execution quality and trade performance.

The responses included views from 45 buy-side equities market participants across the US and Europe, of which 28% expect their firms to ‘at least consider’ adding an outsourced provider over the next two years. One respondent specifically commented that “outsourced providers act as an extension to the trading desk and understand our trading goals”.

Hantman tells The TRADE: “Between 2017-2019, especially in the UK and Europe, there was a lot of pressure for traders to justify their worth, especially considering things like Mifid II unbundling. At that time, the last thing that a trader wanted to hear about was the wonderful attributes of outsourcing.

“If you look at the last couple years there has been an evolutionary rate of acceptance which has accelerated recently. It suggests that the concept of outsourcing or supplemental trading has become institutionalised.”

Traders, and portfolio managers, across the industry are seemingly eager to be part of these conversations – not just about the dawn of outsourcing but also when it comes to technological change across the market.

When it comes to those truly at the coalface of the trading processes, overlooking their acumen should be done at a firm’s own peril.

“We as an outsourced trading community are always going to come up against the ‘fear factor’. However, by not being present in the set-up of a new regime [buy-side traders] are missing opportunity to have a say and effectively create even greater job security with a hybrid approach,” asserts Hantman.

Across firms, senior executives appear to be increasingly taking this on board, attempting to find the perfect balance between saving costs and weighing the true, long-lasting impact of making those big moves.

The market is moving, keep up

Against the backdrop of the growth of the outsourced trading industry, the landscape is set to continue its evolution in marked ways.

Gray predicts two key developments, which are now beginning to emerge: “That growth would lead to new entrants and to more consolidation amongst providers. This would result in polarisation, with a few key players and a larger number of smaller specialists leading the growth.”

Recent times have seen swathes of bigger and bigger firms turning to outsourcing in one way or another, however The TRADE understands that some of the largest firms have been embracing this strategy for quite some time and big moves have already transpired.

Examples just from the last six months include UK-based investment management firm Waverton – which has £9.1 billion AUM – outsourcing some of its trading to Northern Trust Integrated Trading Solutions (ITS), Nordea outsourcing the portfolio management of its emerging market bond funds to Metlife Investment Management, Singapore-based investment manager New Silk Road outsourcing its trading to Northern Trust, and most recently Stifel and Marex unveiling a new outsourced trading partnership under a broker referral scheme.

From Tourmaline’s perspective, Hantman asserts that the firm has been trading for multiple trillion plus asset managers for years, though these are unwilling to be named publicly.

Similarly, Crowe confirmed to The TRADE earlier this year that BNY “absolutely” has large scale clients on its books already. BNY announced a partnership with Goldman Sachs Asset Management in March concerning global trade execution services in EMEA, the US and APAC markets across fixed income, FX, derivatives and ETFs.

Speaking to The TRADE about the FX space specifically, Burke shares that BBH has also seen continued interest from larger managers who have FX resources and technology in-house.

“Many of these mangers are multi-asset class who may manage FX related to fixed income in-house, then lean on a provider to solve for equity related FX, coverage of restricted markets, or for rules-based share class and portfolio hedging programs,” explains Burke.

In The TRADE’s inaugural Outsourced Trading survey, it was discovered that around 72% of clients had less than $5 billion in assets under management, 15% had between $5-10 million, 8% were in the $10-50 billion category while 2.5% were in $50-100 billion and another 2.5% in the $100 billion-plus range.

While historically, this has very much been a space taken up by smaller funds – some large funds are demonstrably turning, or have turned, to these solutions. So, with ever-larger players making real moves in the space, what’s next on the agenda?

“Many articles have reported that better execution and cost-effectiveness are the principal motivations behind outsourcing, but we have noted the ability to cover multiple regions and asset classes are just as important,” Gray tells The TRADE.

Looking ahead, he shares that he foresees the next phase to be towards key players investing significantly in their offerings, providing services in a wider range of asset class coverage, such as fixed income, and also, importantly, emphasises the potential for further consolidation in the market.

Speaking from the Jefferies viewpoint, he shares that “from a technology standpoint, the ability to not only access but develop your own proprietary trading software will continue to be important.”

In the same vein as Gray, Crowe also highlighted a trend of expansion into further asset classes, away from just equities: “Fixed income is probably the next most logical volume traded asset class in the market […] but there’s also a lot of further interest in derivatives and other instruments.”

In terms of consolidation, the market has seen a range of key moves in recent times as firms seek to further deepen relationships and widen their reach.

Earlier this year, State Street acquired CF Global, a significant development in the outsourced trading world, which allowed the firm to considerably expand its geographic reach. Just prior to this, commodities specialist Marex completed its acquisition of TD Cowen’s outsourced trading and prime brokerage business.

Both transactions, among others, could fairly be considered a net reduction in the community, however the synergistic approach has been widely hailed as the future as the industry continues to battle costs, keep up with increased global correlations, and maintain effective processes. The industry will therefore likely see consolidation continue. 

Evidently, the gap between the most successful players in the space and ‘everyone else’ is continuing to grow ever wider. As the market ramps up in terms of the size of key players, heavier expectations on providers, and the consistent battle to strike the best balance between costs and effective trading, outsourced trading strategies are set for continued and significant evolution. The future landscape looks set to be markedly different to what the market is seeing today.

The post Outsourced trading: Easy to do, difficult to get right appeared first on The TRADE.

Jack Seibald

Specifically, the arrangement will see Stifel’s institutional sales and trading group offer its institutional client base access to Marex’s multi-asset class custody, financing, securities lending, and capital introduction.

The move comes as Stifel looks to enhance its differentiated products offering, explained John Spensieri, co-head of equity trading at Stifel: “Our sales and trading group at Stifel is primarily driven by the goal of offering our clients exceptional service coupled with unparalleled value.

“Marex has a well-established prime brokerage and outsourced trading business, with technology-powered data, that will complement our emphasis on offering differentiated products to meet the evolving needs of our global client base.”

As part of the partnership, Marex’s institutional clients will receive access to Stifel’s research, banking, and corporate access offerings.

Currently, Stifel’s global sales and trading team consists of traders across the US, UK, Europe, and Canada, with its offering encompassing: block trading, portfolio, and algorithmic trading, ETFs, commission sharing arrangements, options trading, and convertible and preferred trading. 

Read more: Fireside Friday with… Stifel’s Raymond Powell 

Jack Seibald, global co-head of prime brokerage services and outsourced trading at Marex, explained: “This partnership is a key differentiator that will further enhance our capabilities and complement efforts to expand the global reach of both firms.” 

The post Stifel and Marex unveil outsourced trading partnership under new broker referral scheme appeared first on The TRADE.

I would say that it is largely a c-suite level decision, however, there has been a taboo associated with the idea of outsourcing where people think it equates to eliminating your trading team completely, but I think now we’ve moved past that and it’s not so much an opinion we’re seeing.

In terms of who makes that decision of course it is down to the people who are motivated by, and tasked with, looking at overall operating model transformation and cost efficiency – which are generally COO’s and CFO’s.

Those individuals seek experts in their partners and we are very much engaged with CIOs as well as constantly working closely with the heads of trading – the people who are really at the coal face of the complexity around trading and the investment process. 

Read more: The TRADE’s The Outsourced Trading Handbook 2023 

From our side, we have conversations with both groups across the client base. A key facet of our relationship with those looking to outsource is our connection to the brokerage community. When you have a true buy-side trading team, traders know each other very well, and so when it’s time to onboard – for either a partial or a full outsourcing – those broker connections are really critical in moving forward quickly. 

How has onboarding the first clients to BNY Mellon’s Buy-Side Trading Service gone?

We’ve been really pleased that we were able to – in quite a short time frame – establish the workflows and how we support our clients’ needs. Between trading teams, that partnership is a particularly significant component, and it takes time to build those relationships desk to desk.

When you know the expertise is so strong on both sides, you have the ability to speak the same language and create a partnership relatively quickly. Because of that, we have been able to go from start to finish and get up and running with clients in a very short period of time. 

BNY Mellon has very strong relationships with our clients, and we’re always thrilled when we get the opportunity to do more for them. These partnerships are a great opportunity to bring a newer capability to long-standing relationships.

Read more: Goldman Sachs AM set to leverage BNY Mellon’s buy-side trading solution

And this has been a great opportunity for us to prove our hypothesis that the level of complexity and the scale at which we are able to support trading in a really streamlined and straight through manner is differentiated.

Truly multi-asset and global investment strategies can be supported through our offering, and I think that that is somewhat new in this market.

How are decisions made as to the structure of the outsourced offering?

We’ve seen the gamut really: cost efficiency, looking to just get more efficient generally; more variability with costs; greater coverage of every market in every jurisdiction.

It’s based on client needs and, importantly, on taking the opportunities that they present to us. We take the time to truly understand the business and spend time looking at their trade data and transaction history so that we can pinpoint opportunities or maybe even gaps that can be filled. 

We’re proud of the data science capability that we’ve built out over the last five years or so, our ability to take large complex data sets, analyse it and produce real, meaningful results that help clients understand what the right use of our capabilities might be. 

Looking at T+1, which is causing everyone to have a fresh look at how they are managing their trading activity throughout the global cycle, we’re having some key conversations. It’s been very gratifying from our perspective to work with clients who are really forward thinking. It’s those CIO’s, or even heads of trading, who are saying ‘I want to position my institution for the next 10 to 20 years, I don’t want to be holding on to the legacy of the way things have always been done, I want to be open-minded’.

Going on a journey with a client to talk about how this could fit in among a much larger operating model transformation is a really interesting conversation.

Does a big client like Goldman outsourcing have a domino effect?

I don’t think as a standalone that is the case, we absolutely have other clients that we’re actively contracting with who are larger asset managers looking to participate in buy-side trading solutions proactively and for large portions of their trading activity.

A client like Goldman Sachs is definitely not a one off, but on the other side of that, there are many clients who are on a journey. Years ago, it was the middle-office who were contemplating outsourcing and people couldn’t even consider that you would allow somebody into your books and records in that way. However today things are different thanks to sophisticated options being readily available from trusted providers.

I think we’ll continue to see a slow chipping away at different client types but for the moment, those with more pressing situations like T+1 are motivated in a different way to solve problems imminently.

I would also mention the more traditional clients of outsourced trading, the smaller hedge funds, are also broadening their view of the potential of outsourcing – for example, looking at providers to widen the scope of trading – at BNY one can trade derivatives and fixed income, not just equities. A new wealth of opportunity.

Then, for larger hedge funds, we’ll also see a little bit of everything happening over the next 6 months, a year or two years. We can see and feel that the asset management community is responding to the number of providers, the sophistication of providers like ourselves, and of course the significance of seeing their peers make moves in this space. 

What’s next for BNY? What’s the priority? 

We continue to look to expand the footprint physically and so we’ll be adding more traders to our London office this summer and we will continue to round out the offering that we have for asset owners a little bit more holistically later this year.

The focus currently is just that, continuing to expand the size and scale of the team as our client demand grows and we’re again very fortunate to have such a senior and experienced core team in every asset class which makes it relatively easy to add on capacity as demand grows. 

Read more: BNY Mellon to provide outsourced trading solution to the buy-side

In this we’re definitely looking multi-asset, and again, we have teams that are specialists in either equities or fixed income or otherwise and we also have teams that are multi-asset trading so growth will happen across all three of those dimensions.

Currently, of course, what’s been the trend is the expansion away from just equities and so fixed income is probably the next most logical volume traded asset class in the market. But really, for us, it’s completely open.

We trade over 150 investment strategies globally across over 100 markets and fixed income is where we’re seeing people excited about the opportunity to partner for that asset class, but there’s also a lot of further interest in derivatives and other instruments.

The post BNY Mellon’s Rebecca Crowe talks outsourced trading appeared first on The TRADE.

Of these respondents, 26% also highlighted streamlined or enhanced workflows and strategy customisation as key factors.

Two-thirds confirmed that this approach could also provide better access to liquidity in cross-border trading.

Read more – Dispelling the myths of outsourced trading

The study addresses how, as the relationship between human and technology becomes increasingly interwoven, outsourcing could be an answer to some of the key roadblocks.

In this vein, 39% of respondents recognised the value in complementing their current trading processes with outsourced platforms “under limited circumstances,” as some of those surveyed specified a desire to supplement their internal traders.

This figure was up markedly from similar research in 2020, which had the result at 5%. 

The report iterates the importance of human traders when trading across regions in practice, where the personalised service high-touch trading offers is often omitted, presenting additional complexities.

“The nuanced market understanding brought by human expertise remains a crucial element. Humans complement automation by providing essential insights, context and the capacity to interpret intricate market signals, exercise judgment in uncertain times and apply critical thinking in risk-reward assessment.” 

When it comes to the pain points associated with cross-border work, around half of the respondents confirmed that supplementing trading functions with outsourced providers offers potential solutions.

For example, 53% believe it could answer the problem of lack of familiarity with local markets, highlighting gaining local market insights (44%) and understanding market structure nuances (44%) as among the main concerns.

In addition, the relevance of human presence when it comes to 24/7 trading, and securing broker coverage during off-hours, is also a key consideration, with firms seeking to build talented trading desks for noncore shifts. 

“Unsurprisingly, the buy-side’s primary pain point here is operational efficiency, particularly in post-trade workflow functions like mid/back-office and settlement issues […] 19% consider this the most significant pain point, with 49% ranking it in the top three concerns.”  

Almost half of respondents also confirmed that outsourcing could address the issue of insufficient overnight or extended-hours coverage. 

The report suggests that the findings highlight a real opportunity for providers if they make effective enhancements, supplementing “with highly skilled traders, placed in local markets, to deliver top-tier execution alongside seamless integration with clients’ operational systems and workflow technologies”. 

Read more – The Outsourced Trading Handbook 2023

Coalition Greenwich shared the response of one portfolio manager, which highlighted how outsourced providers “act as an extension to the trading desk and understand [our] trading goals,” while another commented on the importance of “added expertise that [we] do not have in-house.” 

Back in 2020, a Coalition Greenwich study found that only 5% of buy-side equity traders indicated they would be open to using an outsourced trading platform for international trading. These most recent findings therefore demonstrate a huge leap in terms of market opinion.

The results of this most recent report also echo Coalition Greenwich’s previous findings on the balance between human intuition and technology, with its assertion from 2019 arguably truer than ever: “Five years into the future, financial services work will be a true merger of the best of both humans and machines […] Investing and trading decisions will still tilt toward human intuition, but data analysis and trade execution will more often see computer automation take the lead.” 

Earlier this year, The TRADE launched its inaugural Outsourced Trading Survey 2023, conducted with Global Custodian and Ergo Consultancy. More than 200 asset managers, hedge funds and other users of outsourced trading providers voiced their opinions in this first-of-its-kind piece of research. 

The post Around two-thirds of buy-siders believe outsourced desks could enhance trade performance in cross-border trading appeared first on The TRADE.

This year’s Outsourced Trading Awards shortlists span across four categories including: Outstanding Coverage, Outstanding Execution, Outstanding Operation and Post-Trade, and Outstanding Client Service and Relationship Management.

The awards recognise performance based on European and APAC-based clients, while our sister publication Global Custodian will be awarding the top performers among US clients.

The shortlists are based on performance in The TRADE’s inaugural Outsourced Trading Survey 2023, which was conducted earlier this year in partnership with Global Custodian and Ergo Consultancy.

The Outsourced Trading Survey seeks to dig deep into one of the most prevalent themes among the buy-side in recent years, to gain insights into the service provision they receive and how they feel the space will evolve over the next few years.

More than 200 asset managers, hedge funds and other users of outsourced trading providers voiced their opinions in this first-of-its-kind piece of research.

Winners of the Outsourced Trading Awards 2023 across the four categories will be announced on 8 November when our annual awards night returns to The Savoy Hotel in London, alongside our other award categories including Editor’s Choice, EMS, Algorithmic Trading, FinTech of the Year and Buy-Side.

For more information and to secure your spot at the event, visit our event page.

Outsource Trading Awards 2023 shortlists:

Outstanding Coverage

CF Global
Northern Trust
TORA
Vontobel

 Outstanding Execution 

BNP Paribas
Northern Trust
TORA
Vontobel

Outstanding Operations and Post-Trade 

BNP Paribas
CF Global
TORA
Vontobel

Outstanding Client Service and Relationship Management 

CF Global
Northern Trust
UBS 
Vontobel

The post Leaders in Trading 2023: Outsourced Trading Awards shortlists revealed appeared first on The TRADE.

With broker-dealers, prime brokers and custodians alike investing heavily in offering outsourced trading units – alongside smaller, independent outfits – buy-side firms are increasingly turning to these services amid an environment of rising cost pressures and increasing market complexity together with a desire among to focus on their core strengths.

As a result, many are outsourcing coverage of certain regions or asset classes, while some outsource their entire trading operation, depending on firm size and goals.

 A report by Coalition Greenwich last year found that the number of providers in this space has increased more than fourfold in the last five years, growing from fewer than 10 to more than 40 from 2018 to 2022.

The TRADE with its front-office audience, and Global Custodian with numerous chief operations officers among its readers, have come together to ask their communities to rate their service providers to gain detailed insight on the sector and to help clients – both existing and prospective – differentiate the services on offer. 

The survey was created in collaboration with Ergo Consultancy – a specialist firm advising asset managers and hedge funds on all aspects of trading and execution across asset classes – and incorporating industry feedback. The questions cover a comprehensive range of services and capabilities offered by outsourced trading firms. 

“We’ve been running surveys across Global Custodian and The TRADE for decades with some of our flagship areas of research dating back to the 1980s,” said Jonathan Watkins, publisher, Global Custodian and The TRADE. “Outsourced trading is a rapidly growing space which impacts readers on both our publications, from the traders to the operations heads and beyond. We’re delighted to launch this survey in partnership with Ergo Consultancy to gain a deeper insight into this sector, identify trends in the coming years and provide our audiences with a comprehensive analysis of the providers in the space.” 

The survey is now live and respondents can rate their providers through this link. Providers have the opportunity to add themselves to our dropdown list of organisations to rate by contacting our team at otsurvey@thetradenews.com and can complete a provider questionnaire form here to add colour to their own service. 

Results of the survey will be published in both The TRADE and Global Custodian third quarter magazines and on both websites.

David Berney of Ergo Consultancy said: “The outsourced trading market has grown from a niche 20+ years ago to a mainstream business now. Ergo has been active in helping firms select the most appropriate providers for well over a decade and havee watched the industry and the breadth of its offerings grow exponentially. We are delighted to be part of this survey process and we look forward to it becoming as much a part of the landscape as Global Custodian’s agent banks survey, and the TRADE’s Algorithmic Trading and EMS surveys.”

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