Once firms decide to adopt outsourced trading, the challenge shifts to defining needs and selecting the right partner. In the third episode of this four-part series, experts from Marex and Coalition Greenwich explore how firms must assess their structure, asset classes, and global reach before evaluating providers. Key selection criteria include flexibility, experience, infrastructure, and alignment of interests. They stress the importance of a client-centric, agency-style model, strong trader expertise, and manageable client ratios—especially in volatile markets—saying success depends on trust and a cultural fit, setting the foundation for a long-term, effective partnership.
Transcript
VOICE OVER – Once a firm has decided that outsourced trading may form part of its operating model, the focus shifts from why to how and with whom. Before evaluating providers, firms need to be clear on what they expect the relationship to deliver.
Jesse Forster, Coalition Greenwich – For clients, to get the most out of outsourced trading providers, they really need to be aware of their own needs. How is their desk structured? Are they global? Are they multi-asset? Which regions are they trading in? What are they looking to get out of the outsourced trading experience?
VOICE OVER – Outsourced trading can operate in different ways. For some, it becomes thee trading desk. For others, it supplements an existing team.
Bobby Crosswell, Marex – There are multiple ways to work with the buy-side trading desk, either full service or supplemental. Full service, you’re literally doing everything, soup to nuts, supplemental, meaning maybe a trading desk has a trader on staff, but they want to outsource some of that functionality, whether it’s a different region or a different asset class.
VOICE OVER – It is also important to distinguish between an execution provider and outsourced trading.
Bobby Crosswell, Marex – Outsource execution, it is what it is. It’s pretty much just execution. Outsource trading is a bit more end-to-end in terms of the process and the life cycle of a trade, including middle office, support, research, capital introduction, the list goes on.
VOICE OVER – With objectives and structure defined, evaluation criteria comes next. Coverage, experience, infrastructure, flexibility, alignment and the depth of the team behind the desk, these factors determine how the desk will function in practice.
Massimo Labella, Marex – I think flexibility is key. Having an outsourced trading provider that can offer everything that the client requires is paramount.
Jack Seibald, Marex – And the greater the flexibility, I think the easier it is for investment managers to get comfortable with the idea of outsourcing, because it gives them the opportunity to adjust over time.
Bobby Crosswell, Marex – Firms should be asking, How long have you been around? What regions can you trade? Where are your traders located? What different asset classes can you trade? They should be asking, how much experience do your traders have? How many traders? Do they primarily have buy-side backgrounds or sell-side backgrounds? What does cost typically look like? What does onboarding time typically look like? What other services do you provide in addition to just outsourced trading?
VOICE OVER = Outsource trading is a working partnership. The desk operates in your name and represents your interests in the market. That makes alignment critical.
Jack Seibald, Marex – Client-centric, outsourced trading provider comes to market like a buy-side trading desk. Our business from the get-go was set up as a buy-side trading desk, and what that means is everything we put into place was meant to replicate what a trading desk would look like inside of an investment firm.
Massimo Labella, Marex – One of the important aspects of a great desk is an unconflicted service. You know, we operate in an agency-like manner. We do not have a proprietary book. It’s a totally segregated business, and I think that’s very important to foster trust as well with our clients.
Bobby Crosswell, Marex – A great outsourced trading desk is going to service you in volatile times and in quiet times the exact same way. And one way that we handle that is by keeping a low trader-to-client ratio. We typically have about three to five clients per trader. Some of our competitors are upwards of 15 to 20 clients per trader, and a fast market that becomes very difficult.
Massimo Labella, Marex – It’s the expertise, the capacity, the people who’ve seen the various volatile events over the last 15-18 years and have that muscle memory to just switch up a gear and continue to provide that service that the clients need in times of stress.
VOICE OVER – Selecting an outsourced trading partner requires disciplined evaluation as much as professional judgment. Can you work with this team every day?
Massimo Labella, Marex – A really important question that clients should ask is, who do we currently service that looks and thinks like them? It’s far more important for buy-side clients to listen to their peers talk about a service provider and understand from them in their own words, how they interact with us.
VOICE OVER – In our next episode, we examine how those partnerships are built, from onboarding through to integration, and what determines long-term success.
