Asset Managers and Outsourcing the Trading Desk

Executive Summary

Although outsourced trading desks have existed for some time, interest in such offerings has increased in recent years as the asset management industry faces increasing pressure in terms of fees, fund performance, and regulation. This is leading even larger asset managers to outsource at least part of their trading desks. Opimas expects that by 2022 about 20% of investment managers with assets under management greater than US$50 billion will outsource some portion of their trading desks.

Table of Contents

Chapter   Page
Executive Summary   2
Overview   3
  Asset Managers Face Headwinds 3
  Outsourced Trading versus Agency Brokerage 4
  Deployment Models 5
Economics of Outsourced Trading 6
  Fee Structure of Outsourced Trading 6
  Operating Expenses 6
  Execution Quality 9
  Where Does Outsourcing Make Sense 11
Case Study: Hermes Investment Management 13
Outsourced Trading Desk Providers 15
  List of Providers 15
  Criteria for Selecting a Provider 17
Looking Forward   18

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