Full Outsourced Trading

Trading markets are more global, complex and fragmented than they were even a decade ago. For many buy-side firms, this has made traditional in-house trading harder to scale efficiently and increasingly challenging to resource across asset classes, regions and time zones.

Outsourced trading has therefore become a more established and accepted part of the buy-side operating landscape. Under this model, a firm appoints a specialist execution partner to carry out trading activity on its behalf, gaining access to experienced traders, technology, market connectivity and supporting infrastructure without building and maintaining a full internal dealing desk.

Importantly, outsourcing execution does not mean outsourcing responsibility. Firms remain fully accountable for best execution, governance and oversight. What changes is the execution model, not the regulatory or fiduciary obligations attached to it.

Cost is not always the primary driver for outsourcing, nor should it be the sole reason for making the shift. That said, the economics of running an in-house trading desk are increasingly relevant. Senior trading salaries, technology licences, market data, connectivity and business continuity arrangements create a significant fixed-cost base that can be difficult to scale as trading activity and asset class coverage evolve.

Outsourced trading can convert much of this fixed cost into a more variable and predictable expense. Access to multi-asset execution capability and global coverage is typically provided on a transparent fee basis, allowing firms to better align execution costs with assets under management and trading volumes. There are also indirect benefits, including reduced key-person risk, lower recruitment and retention pressure, and simplified technology and vendor management.
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Ergo Consultancy works with clients to design trading operating models that reflect how they actually trade today. This includes fully in-house, fully outsourced and hybrid approaches. These are not ideological choices, but practical tools. Our role is to help firms select the right model, or combination of models, and implement it in a way that is robust, proportionate and aligned with their investment objectives and governance framework.