The Trade: custodians see demand for outsourced trading desks surge

Major custodian banks have highlighted outsourced trading as one of the most in-demand services from buy-side clients during the COVID-19 pandemic. Speaking with The TRADE, a handful of service providers including Northern Trust, State Street and BNP Paribas have pointed to an uptick in demand for outsourced trading and dealing that began before the crisis and has now accelerated during.

The case for outsourcing trading has strengthened in recent years as notable benefits have come to the fore in an environment that has seen a shift from active to passive management, increased regulations and squeezed margins for asset managers facing pressure over their fees and costs.

Subsequently, custodians have joined a range of other independent firms in setting up outsourced trading desks. The move shows a diversification in their offerings as securities services providers have been forced to evolve from relying solely on custody-related offerings to thrive.

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