[ I N D E P T H | M A R K E T U P D A T E S ]
While debate has rumbled on regarding the ceiling – in terms of billions of dollars in AUM – of what size an asset manager would turn to some form of outsourced trading , along comes a $ 2.81 trillion behemoth which rubber stamps the entire concept . Could this be the start of a domino effect ?
“ We absolutely have other clients that we ’ re actively contracting with who are larger asset managers looking to participate in buy-side trading solutions proactively and for large portions of their trading activity ,” Rebecca Crowe , managing director and chief operating officer at BNY Markets , told The TRADE .
“ A client like Goldman Sachs is definitely not a one off , but on the other side of that , there are many clients who are on a journey . Years ago , it was the middle-office who were contemplating outsourcing and people couldn ’ t even consider that you would allow somebody into your books and records in that way . However , today things are different thanks to sophisticated options being readily available from trusted providers .”
Now notably this agreement doesn ’ t include equities . We also don ’ t know the model which BNY is offering , but either way this is a huge moment in the ascension of asset managers warming to outsourcing components and / or activities of their trading desk .
Last year , we referenced the arrival of the 800lb gorillas ( the biggest players ) and whether there would be a domino effect once that happens . Well , if Goldman was said gorilla , then it will be interesting to see who follows in the coming months .
For Chris Blackburn , who heads up UBS Execution Hub , EMEA , there has been a shift towards the largest client using supplemental execution services to drive efficiency , rather than full outsourcing .
“ Existing trading desks of larger asset managers are increasingly using UBS Execution Hub to add particular capabilities or capacity where they determine that it does not make sense for them to build in-house ,” he says .
“ Common use cases include ; providing buyside execution coverage for different time-zones and non-primary asset classes , datadriven broker wheel automation , trading anonymity , and broker list consolidation .
“ There are two main drivers : First , heads of trading want to allocate their available resources as efficiently as possible . It often does not make sense for them to build a particular capability in house when those internal resources could be better focused on core activities ,
“ Going on a journey with a client to talk about how this could fit in among a much larger operating model transformation is a really interesting conversation ."
REBECCA CROWE , MANAGING DIRECTOR AND CHIEF OPERATING OFFICER , BNY MARKETS
2024 // Outsourced Trading Handbook // 27