A once-in-century disruption to securities trading is intensifying a revolution in how some investment firms conduct business.
With at-home traders navigating the wildest market swings in history, more money managers are tapping outsourcing companies to buy and sell financial assets on their behalf. With their employees at risk of falling sick or losing regular access to market venues, the buy side in lockdown is turning to a booming industry that’s drawing big-gun entrants includingState Street Corp.,AllianceBernstein Holding LP andWells Fargo & Co.
In so doing, the largest providers are reporting a surge in revenues as transaction volumes jump and new clients sign up.
Outsourced traders essentially act as a middleman between the buy side and sell side in handling trading flows. Some outsourced trading divisions are run inside bigger financial services firms, like Jefferies Financial Group Inc., while others operate as small, standalone shops. Their pitch to asset managers: Ensuring best execution with an extensive network of brokerages and high-speed technology, which can be expensive for smaller funds to maintain on their own.
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