Outsourced Trading is a service that assumes the execution responsibilities for an investment manager’s trading desk, providing either complete or partial support for all execution needs.
Our Outsourced Trading offering was created on the foundation of xBK, a BNY Mellon trading group, who services our internal investment management companies.
In 2018, we overhauled the existing buyside trading capabilities through investments in technology, analytics, reporting and established a dedicated data science team. These efforts have created a modern and scalable infrastructure and allowed us to enhance execution outcomes through automation, innovation and a systematic workflow.
Our team has significant expertise in supporting domestic and global trading across Equities, Fixed Income, Derivatives and Foreign Exchange. We understand the needs of investment managers and the complexity of buyside trading workflows.
Historically, small hedge funds and retail clients have leveraged outsourced services, from trade execution through to the back office. Larger buyside firms have progressively followed suit and outsourced their middle and back-office functions, but it didn’t usually extend to trade execution. This was due to the close relationship of portfolio managers and trading and the expectation that they had to sit in close proximity to each other.
We are now seeing this trend change with the adoption of the hybrid work model and portfolio managers are often separated from their traders in communicating through electronic means. This change compiled with industry fee compression, sustained volatility and increasing costs have challenged in-house trading team’s ability to manage operational complexity while remaining competitive.
Evolving markets, electronification and regulatory overhead have led to increased cost to run an internal trading desk. These costs are more challenging to manage in a business cycle marked by fee pressures and margin compression.
Standing up new investment products or expanding to new geographies requires sustained and incremental investment in people, systems and data.
Clients looking to transform their operating model and plan to grow through acquisitions are increasingly looking to simplify their technology footprint without having to maintain a complex trading infrastructure.
FOCUS ON CORE COMPETENCIES
Investment managers can dedicate their resources and investment to their core capabilities of research or asset allocation and not the implementation of those ideas.
Brokers have increasingly concentrated their focus on their largest and most profitable clients, leaving small to mid-sized managers squeezed for resources and support. Outsourced Trading allows these managers to benefit from economies of scale and improve access to liquidity, allocations and pricing.
A flexible solution
Outsourced trading does not have to be a one-sized fits all approach, it can be customized to meet your needs.
- Partial Outsourcing - We supplement your trading desk’s existing capabilities with targeted expertise in specific asset classes, time zones or regions as an efficient way to solve for coverage gaps or expediate new market entry.
- Full Outsourcing - We assume the responsibilities of your trading desk, representing you to the market and executing trades on your behalf. This model provides significant opportunities for efficiencies and savings.
BNY Mellon is uniquely positioned to compete in the outsourced trading space.
- Liquidity estimates
- Exposure Assessment
- Cost Estimates
- Execution Strategy
- Counterparty Selection
- Trade costs vs. Benchmarks
- Real Time Monitoring
- Post Trade
- Best Execution
- Transaction Cost Analysis (TCA)
- Commission Reporting
- End-to-End FIX Message Logs
- Continuous Blotter Snaps
- Comprehensive Trade and Quote Datasheet
- Multi-Asset TCA
- Proprietary Analytics Platform
- Transactional Market Data Sets
- Fine Tuning of Execution Results
- Validation of Trading Strategy
- Data-enhanced Strategic Decision Making
- Trade Data
- Daily Activity
- End-of-day Trade Summary
- Weekly Outlier and Impactful Trades
- Best Execution Oversight
- Fund Board Reporting
- Regulatory Reporting
- Trade Practices Committee
- Compliance Monitoring
- Performance and Analytics
- Quarterly TCA Analysis and Summary
- Market Trends
- Broker Commission Insights
- Concentration Analysis
- Sector Insights
Ready to grow your business?
Speak to our team.
Outsourced Trading is offered through BNY Mellon Capital Markets, LLC only to Institutional Clients in the US and select countries in EMEA where permitted by local law. Not all products and services are offered in all countries. BNY Mellon Capital Markets, LLC (“Capital Markets”) is a full-service registered broker-dealer and an indirect wholly owned non-bank subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”). BNY Mellon and its affiliates lend and provide other products and services to issuers and others and provide and receive related fees and compensation. Capital Markets is a member of FINRA and SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. SIPC does not protect against loss due to market fluctuation. SIPC protection is not the same as, and should not be confused with, FDIC insurance. 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