Investors increasingly looking to outsource dealing functions
03 July 2019 London
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Some 21 percent of institutional investors are considering outsourcing their dealing function in the next 18 to 24 months, according to a BNP Paribas Securities Services survey.
The survey of asset managers and asset owners, conducted in partnership with Sionic, found this trend is driven mainly by cost pressures and the increasing need for institutional investors to have access to a 24-hour specialist dealing services.
Other drivers include the need to reduce operational risk and improve execution outcomes through connectivity to a greater range of brokers.
Respondents also cited the need for regulatory support, particularly on the transaction cost analysis front, and the need to keep up with the latest technological advances as market fragmentation makes execution more complex.
The research includes the input of 30 investment managers based in Belgium, France, the Netherlands, Portugal, Switzerland and the UK, which were surveyed by Sionic in February and March 2019.
These investors range from in-house pension managers, wealth managers, and institutional fund managers through to large global managers.
Thomas Castiel, head of dealing services at BNP Paribas Securities Services, said: “Outsourced dealing offers an interesting alternative to setting up an internal dealing function. It’s a less mature market than an outsourced middle office for example, but things are changing fast.”
He added: “In addition to hedge funds and small boutiques, which were early adopters of outsourced dealing services, we now see larger investment managers looking to outsource their dealing operations to support their development in different regions and assets classes with a cost-effective solution.”
Clare Vincent-Silk, partner at Sionic, commented: “The dealing role has evolved and become more sophisticated as new trading methods and venues have appeared.”
“With Markets in Financial Instruments Directive-driven market fragmentation, the role of the dealer has become less administrative and more specialist. However, not all dealing teams have the capability to deal with the new world.”
The survey of asset managers and asset owners, conducted in partnership with Sionic, found this trend is driven mainly by cost pressures and the increasing need for institutional investors to have access to a 24-hour specialist dealing services.
Other drivers include the need to reduce operational risk and improve execution outcomes through connectivity to a greater range of brokers.
Respondents also cited the need for regulatory support, particularly on the transaction cost analysis front, and the need to keep up with the latest technological advances as market fragmentation makes execution more complex.
The research includes the input of 30 investment managers based in Belgium, France, the Netherlands, Portugal, Switzerland and the UK, which were surveyed by Sionic in February and March 2019.
These investors range from in-house pension managers, wealth managers, and institutional fund managers through to large global managers.
Thomas Castiel, head of dealing services at BNP Paribas Securities Services, said: “Outsourced dealing offers an interesting alternative to setting up an internal dealing function. It’s a less mature market than an outsourced middle office for example, but things are changing fast.”
He added: “In addition to hedge funds and small boutiques, which were early adopters of outsourced dealing services, we now see larger investment managers looking to outsource their dealing operations to support their development in different regions and assets classes with a cost-effective solution.”
Clare Vincent-Silk, partner at Sionic, commented: “The dealing role has evolved and become more sophisticated as new trading methods and venues have appeared.”
“With Markets in Financial Instruments Directive-driven market fragmentation, the role of the dealer has become less administrative and more specialist. However, not all dealing teams have the capability to deal with the new world.”
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