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accordingly .
“ If I saw a value of an opportunity in terms of part of the book of business being outsourced I would have to consider it ,” said Cathy Gibson , global head of trading at Ninety One , in an interview for The TRADE ’ s Q3 Meet the Desk feature .
“ However , I genuinely just don ' t see how outsourced trading is actually going to lead to better outcomes for the investors ,” she explained . “ If you outsource your trading , and my trade gets stuck behind a queue of somebody else who ' s already been trading it or lumped in with another big block because someone else is trading it there ' s no way the client gets a better outcome .
“ Ultimately , while I can see the use case for smaller asset managers with more limited trading hours , for a manager of our size with our capabilities , I just can ' t see a outsource function coming anywhere close to the execution standards we can achieve for our clients .”
Other large asset managers have voiced similar views , however it came as a big shock to many this year when BNY announced it was set to offer its buy-side trading solution to Goldman Sachs Asset Management ’ s EMEA business .
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 . 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 .
As one source tells The TRADE : “ Big firms - not just large AUM , but [ ones who are ] large in trade volumes ” are taking interest . They added the firms are “ cornerstone clients who you would really want ”. In his research for Coalition Greenwich , Forster noted “ While OT was initially designed for emerging hedge funds , we ' ve spoken to several large and wellestablished managers who have also embraced the idea . They use it to gain access to liquidity , research and market intelligence that they might not have internally or through their traditional sell-side providers .”
Given the relationships that some of the custodians have with the world ’ s largest asset managers , it
“ Our trading group are viewed as part of the investment process with interaction and culture aligned . That ’ s difficult to replicate using outsourced trading .”
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would not be a huge surprise to see the likes of BNY , State Street or Northern Trust continue to pick up large clients . Northern Trust has recently announced outsourced trading deals with the likes of Rathbones and True Potential . Meanwhile , The TRADE is aware of two large asset managers in talks with BNY to use its outsourced trading services , though neither had been confirmed at the time of publication .
Decision makers Perhaps some of the animosity towards outsourced trading providers themselves has shifted internally to the decision makers . One buy-side source tells us : “ Implicit costs of trading aren ' t considered by COO ' s or decision makers when they decide to outsource . This is because outsourcing decisions are often made by individuals with little or no trading experience . They purely focus on explicit costs to trading and only look to reduce broker commission .”
Cost efficiencies – in the face of some of the aforementioned headwinds the industry is facing – certainly is a priority for the C-suite across the asset management world . In The TRADE ’ s survey ,
22 // Outsourced Trading Handbook // 2024