Swamped Traders Spur UBS Plans to Build Outsourcing Desk in U.S.

UBS Group AG is building an outsourced trading desk in the U.S. that aims to lighten the load -- and cut costs -- for asset managers and hedge funds.

The bank’s execution hub plans to make a significant number of hires in the U.S., mostly in New York, to cater to buy-side firms, boosting a current team of 80 spread across Europe and Singapore. Outsourced trading desks act as a backup when clients’ staff are out of pocket or provide extra help during busy periods. They can even replace an investor’s trading desk entirely, handling all its orders.

“Overall volumes rocketed last year and they continue to rise in 2021,” Mark Goodman, who leads the global execution hub from London, said in an interview. While outsourced trading was once the purview of a few niche startups, “we change the market by entering the market,” he said.

Money managers are increasingly turning to outsourcing as they compete with passive strategies that have put pressure on margins. The trend could contribute further to the financial industry’s shrinking pool of traders, on top of a dwindling due to the growth of electronic trading.

The outsourced trading group at UBS already serves about 300 clients, including other banks, broker-dealers and wealth managers in Europe and Asia.

Goodman, who was formerly the firm’s head of electronic execution, said UBS’s heft will allow it to serve bigger hedge funds and asset managers that need overflow capacity beyond their areas of specialization. For example, an equities-focused investor may choose to offload fixed-income orders to the outsourced desk, or a U.S.-based investor might ask the outside company to handle positions in Asia or Europe.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.