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A market evolving right in front of our eyes
Once a niche solution for small and mid-sized managers, outsourced trading has evolved into a strategic tool for firms of all sizes- both a defensive and a proactive strategy amid today’ s market pressures. What was initially confined to boutique hedge funds is now attracting even the largest asset managers, including those managing in excess of $ 100 billion.
Now in its third year, the Outsourced Trading Survey continues to chart the expansion and diversification of this evolving market. To date, 21 providers have featured in the published results, with a further six having received votes without meeting the threshold for inclusion, this represents just under 50 % of our known provider universe.
A major trend of recent times is co-sourcing- partial outsourced trading where even firms with inhouse desks leverage external traders, especially for time zones or asset classes beyond their in-house coverage. This targeted approach allows managers to optimise execution in non-core markets without sacrificing control.
UBS’ s surprise wind-down of its Execution Hub in Q1 2025 led to some managers setting up secondary or parallel outsourced trading providers in much the same way as a fund using multiple prime brokers or custodians seeks to avoid over-reliance on any single provider.
Opinions continue to differ on the optimal provider landscape. Historically, some predicted consolidation towards full-service brokers bundling outsourced trading with other services. However, independent specialists remain highly relevant, and many managers wanting to enter the space face a choice between a multi-faceted financial services firm who offer outsourced trading as one of a suite of services or partnering with a dedicated‘ pure’ outsourced trading firm.
Each business model has their own pros and cons and there is no one-size-fits-all answer despite what each side would have you believe. The optimal model depends on a managers structure, needs and strategic priorities. Some will fully outsource, while others will co-source, i. e. maintain an internal desk and tap external support selectively.
Providers have responded by broadening their offerings. For example, Ergo Consultancy’ s TempTrader service supplies veteran traders on a temporary basis to cover absences or to help manage peak volumes, letting firms capture some of the cost benefits of outsourcing without losing control of their order flow and retaining it in internal systems.
Looking ahead, regulatory shifts could raise the stakes further. The UK and EU’ s move toward a T + 1 settlement cycle will compress timelines and may spur even more firms to lean on external execution support.
Ultimately, outsourced trading has shifted from a tactical stopgap to a strategic pillar. When implemented well, whether fully outsourced or hybrid, it can strengthen trading capabilities and build more resilient, future-ready investment operations.
For firms assessing where outsourced trading might fit within their operating model, drawing on independent insight has never been more valuable. With deep experience across provider types, operating structures, and implementation models, Ergo Consultancy continues to contribute to industry thinking in this space and is delighted to work with asset managers, The TRADE and Global Custodian for the third iteration of this handbook and survey.
David Berney Principal Consultant- Ergo Consultancy
48 // Outsourced Trading Handbook // 2025