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“ The trading desk used to be a cog in the machine as opposed to the engine itself ."
ANONYMOUS
opportunities . You don ’ t get this as frequently in a hybrid setup and certainly not when you fully outsource .”
asserted , “ our trading group are viewed as part of the investment process with interaction and culture aligned . That ’ s difficult to replicate using outsourced trading .”
Said panellist stressed the importance of longevity and relationships on the desk - something harder to achieve when outsourcing trading to an external source : “ If you ’ ve got people in and out , it ’ s dislodging ,” they explained .
We spoke with one slightly disgruntled buy-side trader about their experience with their outsourced trading provider under the condition of anonymity . The firm had recently insourced after once turning to outsourced trading and outlined a variety of reasons for keeping everything in-house . Chief among them were broker relationships , enhanced liquidity seeking tools and greater anonymity when you have a centralised desk .
On broker relationships , they explained : “ Many of these relationships take years to forge ; those brokers know where - or where not - to go when looking for blocks , and know how you like to work . In partnering with the sell-side , funds stay relevant and receive calls when they have significant crossing
The big players The TRADE ’ s outsourced trading survey has revealed overwhelmingly high scores two years in a row , however , we do also ask whether respondents have considered changing provider . Last year 83 % answered no , while this year only 55 % gave the same response ( however it should be noted that in 2024 we gave the option not to answer the question ).
Still , there are cases of customer dissatisfaction leading to provider switching or , in some cases , reinsourcing . One example , which is public knowledge , is RailPen , who said back in 2021 : “ The new desk will enable us to seize opportunities quickly , reduce complexity , and have increased control over our risks while lowering the costs associated with trading .”
An internal desk , along with the aforementioned benefits , does allow control of orders , ensuring of best execution , a better relationship with the street and that all important retention of knowledge which becomes part of the firm ’ s DNA and can be shared throughout departments
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