Insights

July 2022
 

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Going Modular: Why Outsourced Trading Is No Longer an All-or-Nothing Option

Digitalinflation

Damian Hoult, from State Street Global Markets Outsourced Trading Distribution and Product Development team, explains how advancement in data and technology is causing fund managers to opt for outsourced trading solutions.

Outsourcing trading execution used to be a binary decision. Fund managers either concentrated entirely on asset allocation and strategy and handed over all trading to a third party, or they built an in-house trading desk to handle all their liquidity requirements and potentially create an extra avenue for alpha.

But asset owners and managers are becoming more receptive to a modular approach as technology advances expand execution capability and regulatory burdens increase execution costs. In Bloomberg’s 2022 US Institutional Equity Trading Study[1], 20 percent of participants said they have plans to implement some form of outsourced trading in the next two years.

Here, Damian tells us why this shift is happening.



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