In the US, a buy-side firm outsourcing its trading desk to a specialist provider isn’t new; but in Europe, it’s been less common, until recently. In this Financial Markets Insights video, Mike O’Hara of The Realization Group, talks to Aaron Hantman, CEO, and Andrew Waltman, Head of European Business, at Tourmaline, one of the leading providers of outsourced trading solutions to the buy side, about the drivers behind the trend and which functions are appropriate for outsourcing.
See below for a partial transcript, and click here to watch the full video on TABB Forum:
Mike O’Hara: First of all, what exactly is outsourced trading, and which functions can be outsourced?
Aaron Hantman: What can be outsourced is determined by the menu, if you will, of what the client would like outsourced. We look at the full life cycle of the trade, starting at after the investment decision has been made. At that point, we can generate a trade electronically, either within the ecosystem of the client or within our own ecosystem, and bring that trade through pre-trade compliance — again, depending on their playbook and their requirements. Then execution begins. Along with the execution process, there is also a market intelligence component. It’s the traditional color that an experienced trader of 15 years or more would be providing a portfolio manager or any real decision-maker in the investment process. With the execution complete, there are then post-trade issues: clearing, settling, reporting. The final component would be analysis around TCA. Being able to do all of this in a buy-side capacity in the same way an in-house trader or trading team would do it — with scale and sophistication — is what we believe outsourced trading is.