Investment Operations

Outsourced Trading and COVID-19: Won’t You Be My Trader?

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The market opportunity for outsourced trading services continues to grow exponentially as buy-side desks are pressured to reduce operational costs, according to the latest Aite Group report.

In recent conversations with outsourced trading service providers, the sentiment on business conditions and prospects ahead comes across as extremely bullish. These outsourced trading desks purport to be conflict-free specialists in the trading function and are flexible, global, and cost-effective. And although generally thought of as a service for small startup funds, using outsourced trading providers has caught the eye of traditional large and established asset managers as a way to deal with cost pressures and expanding mandates.

These views, while disproportionally advantageous to their own self-being, are viewed as logical due to recent market conditions and the market drivers that providers are catering to. Outsourced Trading and COVID-19: Won’t You Be My Trader?, Aite Group’s new report, strives to put these factors into greater perspective alongside the latest market conditions stemming from the COVID-19 pandemic.

“Times of distress can influence attitudes and cause firms to reevaluate and make that critical phone call,” states Matt Simon, senior analyst at Aite Group. “COVID-19 has put a spotlight on the benefits of outsourced trading services as buy-side firms have had to maintain business continuity and ensure optimal dealing outcomes all while under global lockdown,” he explains.

This Impact Report is based on Aite Group interviews with globally based outsourced trading providers conducted during Q1 2020. The data and findings included are supplemented by Aite Group’s ongoing evaluation of equity market structure development as part of the Institutional Securities & Investments practice.