liquidity, assess complex execution algorithms, manage transaction cost analysis, and understand global market structure nuances. The pool of talent capable of handling these demands is limited, and competition for it is fierce.
Of course, with service providers increasing budgets in this field and conducting lift outs, their own rosters have been strengthened to an impressive level, further squeezing the buy-side of industry talent.
For asset managers, the question is increasingly whether it makes sense to fight those battles alone. By outsourcing, they can gain access to seasoned traders, deep relationships with brokers, and institutional expertise that would be costly and time-consuming to replicate in-house. The appeal is particularly strong for smaller firms and new entrants, who might struggle to attract the calibre of talent they need to trade effectively. But even larger managers are beginning to see outsourced trading as a way to supplement their internal desks, covering markets and time zones where hiring internally would be impractical.
The need for coverage and geographical has got to the point where one source explains to The TRADE that they believe outsourced providers need to have cover“ at least three asset classes and multi-time zone coverage to compete effectively in outsourced trading”.
Speaking about the importance of maintaining quality, one head of trading tells The TRADE:“ Beyond a certain point, the marginal savings of outsourcing are quickly outpaced by the superior execution a centralised, in-house desk can deliver; one grounded in a nuanced understanding of internal alpha, investment horizons and longstanding broker relationships.
“ At this inflection point, where execution quality and information sensitivity drive performance, sacrificing that edge for short term efficiency is a compromise neither large managers nor their clients should accept.”
If talent concerns have risen in importance, regulatory and market structure changes remain far from irrelevant. In fact, they underpin many of the efficiency pressures already described.
One of the most significant developments of 2024 was the industry-wide transition to T + 1 settlement in the US. The shortened settlement cycle compresses the time frame for affirmations, allocations, and funding, raising the operational bar for buy-side firms. For many, this has created renewed urgency around outsourcing. Providers with robust
14 // Outsourced Trading Handbook // 2025