In the evolving landscape of asset management, the traditional buy-side trading model is undergoing a seismic shift. Outsourced trading, once primarily viewed as a solution for smaller or emerging managers, is now becoming a critical function across firms of all sizes. As institutional investors expand into new asset classes, geographies, and strategies, outsourcing trading desks provide not only operational efficiency but also scale, flexibility, and access to liquidity — key elements that are transforming the way the buy-side interacts with the market.
Outsourced trading desks have evolved far beyond their initial function as a cost-saving tool for smaller firms. Today, they offer a comprehensive suite of services designed to help asset managers navigate increasingly complex and competitive global markets. With more firms recognizing the benefits of outsourced trading, this model has become a strategic solution, providing access to institutional-grade technology, expert traders, and global liquidity without the need for significant internal infrastructure investment.
According to Stephanie Farrell, Head of Integrated Trading Solutions, Americas at Northern Trust, outsourcing allows asset managers to focus on their core competencies — investment strategies and portfolio management. “Managers are looking to diversify their offerings, explore new asset classes, and expand into global markets. However, building and staffing a specialized trading desk for each of these strategies can be costly and inefficient,” she explains. “Outsourcing offers a scalable, flexible solution, enabling asset managers to focus on their strengths while leaving the complexities of execution and liquidity management to trusted partners.”
This shift is especially evident as firms increasingly see outsourcing as a way to meet client demand for a more diverse set of products and strategies. Jeff LeVeen, Global Head of Outsourced Trading at JonesTrading notes that this trend is apparent across new and established funds. “New managers see the value in outsourcing because it allows them to focus on their core competencies and avoid the costs associated with developing in-house trading infrastructure. Larger, established firms also use outsourcing for supplemental coverage — whether to manage new asset classes or handle time zone differences, vacations, or disaster recovery planning.”
Outsourcing also helps firms mitigate the operational burden that comes with the increasing complexity of financial markets. As Bobby Croswell, Co-Head of Americas Prime Brokerage Sales, Outsourced Trading and Capital Introduction at Marex, points out, the need for multi-asset, multi-time zone execution is growing even among larger clients. “Firms with higher assets under management (AUM) are increasingly leveraging outsourced desks to provide access to liquidity across various global markets, and to handle the growing operational complexity that comes with expanding portfolios,” he says. “The value of outsourcing is not limited to smaller funds — it’s a scalable solution that offers access to a broader range of liquidity providers and a more efficient trading model.”
Liquidity Access and Execution Quality: Key Competitive Advantages
The access to liquidity and the ability to execute trades efficiently and transparently are among the most significant advantages that outsourced trading desks provide to buy-side firms. These desks aggregate liquidity from a broad range of sources, which often includes access to brokers, dark pools, algorithmic trading systems, and direct market access (DMA). The scale provided by these platforms allows asset managers to execute larger trades more effectively, benefiting from better pricing and depth of liquidity.
“Outsourcing to a global provider brings benefits of scale that individual asset managers can’t easily replicate internally,” explains Farrell. “By leveraging our global network of counterparties, we can offer clients enhanced trade execution and deep liquidity across asset classes. In addition, our trade cost analytics provide transparency into execution performance, helping clients make informed decisions and improve their trading strategies.”
LeVeen underscores the role of technology and experienced traders in ensuring optimal execution. “Outsourced trading desks bring a level of sophistication in terms of execution infrastructure,” he says. “Our clients benefit from our access to over 250 global brokers, advanced algorithmic trading tools, and internal block liquidity. This technology stack, combined with our experienced traders, allows us to access liquidity quickly and execute efficiently, leading to better execution quality for our clients.”
At Marex, Croswell highlights how the firm’s access to over 200 liquidity providers enhances trading execution. “Larger asset managers are recognizing the benefit of leveraging our expansive network of liquidity providers,” he explains. “A client trading fixed income with us would have access to over 75 liquidity providers on day one. The speed and scalability this offers helps improve execution quality across different asset classes.”
Maintaining Broker Neutrality and Best Execution
One of the primary concerns in outsourcing trading functions is ensuring broker neutrality and delivering best execution. With an increasing number of firms consolidating their service providers, asset managers want assurance that the outsourced desk will execute trades with the best available brokers, without conflicts of interest or incentives that might skew execution quality.
“Northern Trust operates as an agency-only broker. We do not engage in proprietary trading or operate dark pools. This means that we are broker-agnostic and not tied to any particular execution venue or solution,” says Farrell. “This structure eliminates conflicts of interest, ensuring that we can always select the best venues and strategies for our clients.”
To further enhance execution quality, LeVeen highlights the importance of a rigorous internal best execution and broker review process. “We analyze execution performance and broker responsiveness monthly, ensuring that our clients’ trades are routed to the best-performing brokers. This ongoing review ensures that clients receive the highest quality execution possible.”
Croswell adds that Marex maintains a strong commitment to broker neutrality. “We’ve built a broad network of brokers and liquidity providers to ensure we can always execute trades at the best price available,” he says. “As sell-side relationships continue to evolve, and liquidity becomes harder to source, our ability to maintain neutrality and access a wide range of execution venues helps ensure that our clients always receive the best execution.
Debunking Misconceptions: The Strategic Benefits of Outsourced Trading
Despite its growing popularity, several misconceptions about outsourced trading persist in the industry. One of the most common misconceptions is that outsourcing trading results in a loss of control for the buy-side manager. However, the reality is quite different.
“We are an extension of our clients’ teams,” says Farrell. “In the agency model, we act on clients’ instructions, maintaining and enhancing their relationships with brokers, liquidity providers, and research teams. We don’t replace client knowledge; rather, we support it with our global expertise and market relationships.”
LeVeen addresses another misconception: that outsourced trading is only for small or emerging firms. “Outsourced trading is often wrongly perceived as a service only suitable for smaller funds with limited resources,” he explains. “The reality is, it has evolved into an institutional-grade service used by asset managers across the AUM spectrum. Our clients leverage our capabilities to access advanced technology, reduce operational lift, and improve execution quality.”
Croswell further clarifies the misconception that all outsourced trading desks offer the same service. “Many firms claim to offer outsourced trading, but there are significant differences between providers. It’s critical for asset managers to assess the infrastructure, technology, and level of service provided, as well as the broker-neutral stance of the desk.”
The Future of Outsourced Trading: A Strategic Imperative
Outsourced trading has become a crucial element of the buy-side’s broader investment strategy. From enhancing execution quality to providing access to global liquidity and reducing operational costs, outsourcing is no longer a tactical decision; it is a strategic one.
As Farrell point out: “The future of outsourced trading is about enabling our clients to focus on alpha generation while we handle the complexities of the trading process. This allows asset managers to stay competitive in an increasingly globalized and technology-driven market.”
Croswell shares a similar view: “Outsourced trading is no longer just a solution for emerging managers — it’s an institutional-grade offering that provides scalability, flexibility, and better execution across asset classes. For firms of all sizes, outsourcing has become a critical part of their trading infrastructure.”
For LeVeen, the key to success in outsourced trading is in the details: “It’s about optimizing the trading function, improving execution quality, expanding global reach, and reducing fixed costs. A well-established outsourced trading desk offers these advantages — and more.”
The transformation of the buy-side trading model in the U.S. is well underway, and outsourced trading is at the forefront of this change. The ability to scale, manage complexity, and access global liquidity with no conflicts of interest has become a strategic advantage that more and more asset managers are embracing.
