Choosing the right outsourced trading partner is just the beginning. The real test lies in making the partnership work — and work well. In this episode of Outsourced Trading: The Inside Track, in association with Marex, we explore what successful implementation actually looks like: from structured onboarding and technology integration, to managing broker relationships and measuring performance. Industry experts share how trust, communication and collaboration transform an outsourced desk into a seamless extension of the investment process — freeing managers to focus on strategy, alpha and long-term returns.
Watch Episode 4 to find out what a truly effective outsourced trading partnership looks like in practice.
Transcript
Voice Over: Once a partner is selected, the focus turns to implementation. This episode looks at what happens next. How the relationship is structured, integrated, and measured to deliver performance.
Voice over: Outsourced trading is an extension of the investment process. When approached with openness and collaboration from the outset, the partnership functions more effectively from day one.
Jack Seibald, Marex: Setting up an outsourced relationship involves really giving an awful lot of thought to how the investment manager runs their business. To get to know each other and get to really understand the way in which the manager wants to be serviced. Do they want to be involved in every last decision about how a trade gets executed? Or they just want to leave it in the hands of the of the trader, you know, to execute the best possible way for them.
Massimo Labella, Marex: We spend a lot of time understanding the needs of our clients and tailoring the approach for each client accordingly. There are some fringe cases where an outsourced training provider cannot provide what the client requires, and the ability to hold one’s hand up and try to find a solution or a way around it, I think, is very important.
Voice Over: Onboarding is effectively the operational design and implementation phase. It is structured, methodical, and, in most cases, straightforward.
Mark Rogers, Marex: The onboarding process for an outsourced trading client initially involves the discovery process, which involves understanding clients’ needs, and ensuring that their needs are fully met as part of an onboarding outcome.
Bobby Croswell, Marex: We’ll handle all of that heavy lifting, we’ll do an onboarding call. We’ll have an understanding of what systems the client will be using. How we need to integrate. We’ll have an idea of the regions that they want to trade, the asset classes that they want to trade. We’ll need to know the away brokers that they want to work with, what that broker budget looks like, what the timeline is, in terms of the launch date, and things just like that.
Mark Rogers, Marex: That phase is then followed by documentation, which we need to kind of work through. And then we’ll work through the technology phases.
VO: Broker relationships are often the most sensitive part of the transition, particularly in markets where liquidity is relationship-driven. But outsourced desks can free up time while broadening liquidity access and strengthening execution outcomes.
John Orrock, Marex: The thing about fixed income is that it is a relationship business and I think a lot of investors find it very hard to let go of the relationships. My experience is that once fund managers do let go of that responsibility, within a month, they’re quite happy to actually now have the freedom to actually take risk and work bottom up.
Bobby Croswell, Marex: Working with an outsourced trading desk, you immediately have access to liquidity. For instance, our desk, we’re partnered up with 250 brokers globally. The fixed income side alone, you have access to 80 different liquidity providers.
Mark Rogers, Marex: The key here is that what we’re not looking to do is disrupt their model. We’re not looking to create issues for them. We’re looking to work with their broker counterparties in as smooth and transitional a manner as we can.
Massimo Labella, Marex: We value our relationships with the broker, and whether we are acting as the client and trading in their name with the broker, or trading in our name with the broker, the relationship is key to ultimately deliver a better quality of execution to the clients.
Voice Over:Integration runs from order inception through to execution, settlement and post-trade reporting.
Mark Rogers, Marex: Integrating with clients’ technology is fairly straightforward. We have a lot of expertise across many different vendor platforms. It can be a standard off the shelf platform that we connect to. It can be a client’s own bespoke, proprietary platform. We can work towards attaining whatever outcome the client’s looking for and the technology they’re looking to use.
Massimo Labella, Marex: Integrating the systems from, the genesis of the order from the client side through to ourselves and out to the market. Automation means pre trade compliance works efficiently. TCA (transaction cost analysis) is captured correctly. If the systems are in direct communication, then, from an intraday perspective, the risk is captured immediately.
Voice Over: Ultimately, outsourced trading is measured by the same standards as any internal desk.
Jesse Forster, Crisil Coalition Greenwich: The metrics used to assess the performance of an outsourced trading provider are going to be generally similar to those for internal traders. You’re looking at your transaction cost analysis, your execution performance, you’re looking at your liquidity capture, you’re looking at how efficiently and effectively the trader, internal or external, is implementing the portfolio manager’s trading strategy.
Massimo Labella, Marex: From a TCA perspective, we use a third-party vendor that’s totally separate to our business and independent, and we correlate our own TCA results from the vendor with the sell side’s TCA for the same orders.
Bobby Croswell, Marex: A great outsource trading desk is going to service you in volatile times and in quiet times the exact same way.
trading strategy.
Massimo Labella, Marex: Communication and trust are paramount. If we think that there is a better way to add alpha or another way to obtain better execution overall, on a net basis for the client, then that involves a lot of dialogue. And consistency is key. Otherwise, we certainly wouldn’t be here still today, in our current, ever-expanding state.
Voice Over: With structured onboarding and a partnership grounded in trust and open, two-way communication, outsourced trading becomes embedded within the investment process – a resilient extension of the trading desk.Ultimately, it enables investment managers to focus on what matters most: strategy, alpha and long-term returns.
