If you follow buy-side trends, you’re likely aware of the rise of outsourced trading. Once seen as an all-or-nothing solution for smaller or startup funds only, many large asset managers are now leveraging the practice in previously unseen ways, and thanks to a variety of cost benefits, as well as workflow and technology advantages, it looks to be here to stay.
One firm that is enabling this shift is Tourmaline Partners, which provides tailor-made trading solutions to buy-side shops of all sizes. Based in Stamford, and with offices in London and Sydney, Tourmaline engages with over 400 brokers across the globe, helping clients to access unparalleled liquidity and market intelligence.
Founded in 2011, Tourmaline provides outsourced, supplemental and customized trading solutions to asset managers of all sizes. Clients range from emerging managers at launch to those with AUM over $100B. Tourmaline provides execution of global equities, derivatives and ETFs, along with a wide variety of trade support services – international swap aggregation, streamlined clearing and settlement, TCA reporting – as well as a robust commission management solution.
On December 4, Tourmaline will appear at the Equities Leaders Summit in Miami, where CEO Aaron Hantman will participate on a panel exploring the buy side’s growing relationship with outsourced trading and technology. The topics on the agenda are ones that have played out in buy-side boardrooms worldwide: what are the benefits and drawbacks of this emerging strategy, why has there been a surge of interest, and how do the various models differ?
“With all the attention outsourced trading has attracted in recent months, we’re often asked a very simple question: why now?” said Hantman. “The simple answer is that structural change has impacted both the buy and sell sides in recent years, and it’s causing firms to think more critically about workflow, technology and costs. Ultimately, the reasons that our clients outsource are as diverse as the clients themselves.”
One of these changes is MiFID II and its new requirements relating to best execution. By working with an outsourced trading firm, asset managers can expand their reach to the sell side, as maintaining coverage by a wide variety of brokers requires large expenditures of time and resources. A third-party provider is likely to have pre-existing relationships with a large number of sell-side firms and liquidity providers; as mentioned above, Tourmaline connects with more than 400 of these counterparties. In addition, the mounting cost of trading technology means it is more expensive than ever to trade with scale and sophistication, and an outsourced trading firm can ease this burden.
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