The message is clear in The TRADE Outsourced Trading Handbook 2024: outsourced trading is no longer a niche solution; it has become a critical strategy for firms looking to stay competitive in today’s complex and fast-paced markets.
What’s driving this shift? The answer lies in a perfect storm of market globalisation, regulatory pressure and the pursuit of operational efficiency.
For asset managers, hedge funds and institutional investors, outsourcing unlocks new opportunities for growth, optimises execution and enables firms to navigate global markets with greater agility
The second edition of the handbook, featuring the Outsourced Trading—the industry’s only snapshot of client experience—reveals trends underscoring its growing importance.
Here, Mike Rosen, global co-head of prime brokerage and outsourced trading at Marex, shares his perspectives on these developments.
Efficiency, growth and talent in focus
Even the most resistant buy-side traders are warming to the idea of outsourced trading. According to a 2023 Coalition Greenwich report, 39% of respondents recognised the value of supplementing their internal teams with outsourced platforms – up from just 5% in similar research conducted in 2020.
Why the shift? The Trade reports that addressing operational (in)efficiencies (73%) and controlling costs while pursuing growth (37%) are top drivers, along with accessing specialised talent (36%). While cost savings are part of the equation, at Marex we reinforce that it’s really about maximising value; leveraging extensive capabilities through a flexible, variable cost model.
As the industry grapples with tighter margins and mounting regulatory pressures – like the US transition to T+1 settlement cycles – outsourced trading is becoming increasingly recognised as a tool for growth, helping firms scale without overloading internal resources.
The trend isn’t just limited to cost-conscious or resource-constrained firms. Large institutions, which once insisted on in-house trading desks, are increasingly turning to outsourcing to cover other regions, asset classes and time zones.
“Today’s clients demand more than just scale – they expect clear value add.”Mike Rosen Global co-head of prime brokerage and outsourced trading, Marex
A maturing provider landscape
The number of firms offering outsourced trading has hit an all-time high, signalling a maturing market. What was once a niche service dominated by a few specialised providers now features over 50 players, ranging from independents and prime brokerages to custodians.
This reflects the rising demand for outsourced solutions as firms recognise the value these providers bring in helping them navigate complex, fast-moving markets with greater agility and efficiency.
Providers are stepping up with differentiated offerings, however, as The Trade report points out, “the barrier to entry has been historically low, but the barrier to success remains high.” The expanding pool of providers makes choosing the right partner more complex.
Today’s clients demand more than just scale – they expect clear value add.
Global reach, multi-asset capabilities, liquidity access and execution quality have become the key differentiators, with the most successful providers aligning their services to meet the specific goals and strategies of their clients.
Marex: a proven leader in outsourced trading
The outsourced trading team that joined Marex when we were acquired in 2023, have roots in this industry dating back to 1995.
We are a long-standing provider with a team of over 35 buy-side traders serving 175+ clients. As part of Marex, our diversified offering across asset classes, global markets and time zones positions us to meet the growing and complex demands of our clients.
The 2024 survey results speak volumes: while the industry average declined, Marex’s overall score increased, outperforming in 7 of 9 service categories.
With 88% of clients rating our overall service as ‘very good’ or ‘excellent’, standout client ratings came in areas like cost vs. value, coverage, execution, operations, client service and onboarding. Our clients consistently praise our experienced team and superior execution.
This strong position is no accident; it’s the result of continuous investment in talent, infrastructure and expanded offerings, combined with our highly personalised approach, all aimed at delivering exceptional client-focused solutions.
“The survey results speak volumes: while the industry average declined, Marex’s overall score increased, outperforming in 7 of 9 service categories.”Mike Rosen Global co-head of prime brokerage and outsourced trading, Marex
Meeting the expanding needs of modern trading desks
Demand is growing for trading across regions and asset classes, confirmed by a recent Coalition Greenwich report that revealed almost two thirds of buy-side market participants believe outsourced desks would result in improved execution quality and trade performance when trading across regions.
The outsourced trading team leverages its global footprint across the United States, Europe, Middle East and Asia, offering clients 24/6 coverage across time zones.
Joining Marex has broadened our capabilities, combining our strengths in equities, equity derivatives, and fixed income with its global expertise in futures and commodities. This has enabled us to attract larger, more sophisticated multiple-asset funds.
Future outlook: a market poised for continued growth
The outsourced trading market is far from reaching its peak. According to Coalition Greenwich, outsourced trading now accounts for a much larger share of the overall commission wallet than just a few years ago.
Looking ahead, it’s not unrealistic to expect this to grow to a quarter or even a third of the market. Providers that differentiate through global coverage, multi-asset capabilities and seamless, end-to-end service will be best positioned for success in this rapidly expanding space.
To find out how outsourced trading can help your business, click here to check out our services.
