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where it ' s no longer a niche service but , instead , a mainstream solution in the spirit of workflow automation ?”
According to The TRADE ’ s own annual survey , the main reason for outsourcing – from those buy-side who have already outsourced – was around concerns in hiring relevant experience and talent , with 31 % of respondents reporting that this is their main reason for turning to a third-party .
Certainly , an acknowledgement that outsourced trading can cover asset classes , time zones and leave , planned or unplanned , has been widely accepted .
The alpha bet Two heads of trading desk spoke on the matter during TradeTech 2024 this year – under Chatham House rules – on whether outsourcing the trading desk achieves the same outcomes as keeping trading inhouse .
One speaker – who confirmed their firm ’ s trading desk setup and flow lends itself more to high touch trading – focused their answer on alpha retention . This speaker highlighted the trading desk ’ s role within a
“ Has outsourced trading reached a tipping point where it ' s no longer a niche service but , instead , a mainstream solution in the spirit of workflow automation ?"
COALITION GREENWICH ' S JESSE FORSTER wider financial organisation as a retainer of alpha , highlighting the importance of this in the overall investment process .
“ The trading desk used to be a cog in the machine as opposed to the engine itself ,” they said , “ when assessing the desk , it would be a case of being congratulated on achieving minimal errors . I want that to move forward and show how much alpha we ’ re retaining .”
When asked if outsourcing the trading desk could achieve similar or better outcomes , the panellist in question ’ s answer was clear cut : “ 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 .”
The head of trading made the argument for potential levels of ‘ co-sourcing ’ on the desk however , noting workflows that leverage experience from external sources in order to achieve scale . The other panellist – also a buy-side head of trading – corroborated this view .
“ There will be cases for outsourcing ,” they
20 // Outsourced Trading Handbook // 2024