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Alternative Market Briefing

US institutional asset managers and hedge fund managers move towards outsourced trading: Study

Friday, December 07, 2018

Laxman Pai, Opalesque Asia:

71% of survey respondents among US institutional asset management and hedge fund professionals currently employing outsourced trading services describing themselves as "extremely satisfied" with their providers, revealed a study.

A new report by Greenwich Associates, 'Outsourced Trading: Helping the Buy Side Improve Execution and Enhance Operational Efficiency' which investigates outsourced trading and the perception of U.S. institutional asset management and hedge fund professionals toward this growing industry has found high levels of satisfaction among them.

Based on a research study conducted in August and September 2018, the report outlines a diversity of offerings from outsourced trading firms and identifies the reasons that buy-side market participants are adopting these services in growing numbers.

The report identifies key market developments that have led to the rise of outsourced trading firms, including heightened best execution requirements, increasing complexity and sophistication of trading tools and technology, market structure challenges, and shrinking commissions (68% of study participants reported that generating commissions for all brokers is the biggest challenge in managing their sell-side relationships).

The top reasons clients of outsourced trading are satisfied include: the need for additional support for their own trading desks (47%), cost savings (33%) and improved execution performance (26%).

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