Looking to Engage an Outsourced Trading Solutions Firm? These 3 Factors Matter Most

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The outsourced trading space has seen explosive growth, and that means more buy-side firms than ever are seeking to evaluate the various offerings on the market. When it comes to assessing providers, decision makers should prioritize three key measuring sticks: Independence, Scale and Expertise. With these core features as a guide, buy-side firms can more easily differentiate among a growing field of trading solutions providers. 

When it comes to assessing providers, decision makers should prioritize three key measuring sticks: Independence, Scale and Expertise.

Tourmaline Partners was pleased to join a panel at Security Traders Association’s (STA) 89th Annual Market Structure Conference in October in Washington, D.C. to discuss the growth of outsourced and supplemental trading.  The fact that STA hosted a midday panel on this once niche business highlights that the practice of leaning on outside expertise to support equity trading has become accepted and institutionalized. 

In recognizing the growth of supplemental trading, Tim O’Halloran, Managing Director at Tourmaline, reminded the audience that “investment managers have augmented their research efforts with ideas, data and input from sell-side and independent sources since before equity commissions became ‘un-fixed’ in 1975. Certainly, our industry’s development of technology used in trading and research, which came of age in the 1990s, is today a baseline requirement for virtually all buy- and sell-side initiatives.” 

This awareness among investment managers that good ideas and expertise are not found solely within the walls of their own organizations is evident. At the STA Conference, we listened to representatives from multi-trillion-dollar mutual fund complexes share how they now explore the use of artificial intelligence and natural language processing from outside experts to expand their trading and research capabilities. 

This awareness among investment managers that good ideas and expertise are not found solely within the walls of their own organizations is evident.

At Tourmaline Partners, we work with investment managers and asset owners ranging from $50 million to more than $1 trillion in AUM who engage us to expand their access to liquidity and market intelligence. For firms of all sizes, leaning on experts has become widely accepted not only to manage expenses, but also to improve workflows and drive performance. This manifests in a growing number of use cases, such as:

  • Expanding reach to block liquidity, color and research
  • Helping with small-cap trading, closely held and illiquid names
  • Trading offshore markets
  • Addressing bandwidth issues in response to high volumes, volatility, staffing needs and/or BCP
  • Adding expertise, including on high- and low-touch tools and reach, derivatives and more
  • Reducing information leakage

For firms of all sizes, leaning on experts has become widely accepted not only to manage expenses, but also to improve workflows and drive performance.

Please reach out to us to learn more about how Tourmaline Partners can supplement your trading reach to liquidity and market intelligence.