The group, which has rapidly expanded its outsourced trading service in recent years, plans to launch its equity options offering from August, BEST EXECUTION can reveal – while FX will be rolled out over the course of 2024.
The bank has seen its outsourced trading business grow rapidly in recent years, managed through its global execution hub, which allows clients including asset managers and hedge funds to outsource to its desk, along with handling the trading for its own wealth management business.
In 2021 the team, headed by global head of execution hub and platforms Mark Goodman, expanded with the launch of its US outsourced trading desk: managed by Goodman from London and boosted by the hiring of Jon Slavin from Morgan Stanley.
With the strong growth of the team’s offering, the desk (which currently numbers around 106 traders sitting across London, Frankfurt, Zurich, New York and Singapore) is looking to expand its offering across new product lines and asset classes.
“UBS will be deploying cash equity options from August this year, and rolling out additional listed derivatives products from then onwards,” confirmed Mark Goodman, global head of execution hub & platforms at UBS, speaking to BEST EXECUTION.
The bank also plans to launch FX products for its outsourced trading clients from 2024, although no fixed timeline has yet been decided.
“It’s very much down to client demand,” said Goodman. “And this really gives you an idea of the direction in which outsourced trading is going. It started off with quite a narrow focus in equities, then people started asking for fixed income, and now we’re seeing a much greater breadth in what people are looking for.”
While there are some smaller US-based outsource traders who are already offering US cash equity options, and some others who have gone cross-asset to an extent, we can expect further developments.
“Whilst we are considering FX it really depends on what clients want,” said Goodman. “As the use cases expand, clients are developing their ideas on where we could be helpful and that will guide our next steps”
Outsourced trading has become an increasingly competitive arena, with key providers including BNY Mellon, State Street, UBS and Northern Trust all expanding their offerings this year to meet growing buy-side demand. BNY Mellon launched a new buy-side solution in January, while in March State Street confirmed plans to acquire independent outsourced trading firm CF Global. A 2022 report from Coalition Greenwich found that the number of outsourced trading providers had quadrupled over the last four years (2018-22). Earlier this month, BEST EXECUTION also revealed plans by Cowen’s prime brokerage team to spin off from the recently acquired TD Cowen entity, taking its outsourced trading team to a new home.
“We have seen a significant growth in interest and client numbers since we launched. What has surprised us is how our clients don’t view outsourced trading as binary, ‘do I want a desk or not’, but see this as one of a number of solutions which helps them manage their trading capacity in a flexible way,” said Goodman.
“Examples include outsourcing specific regions, asset classes or even leverage the offering as an overflow during busy times. This expansion of use cases for outsourced trading means there is an expansion of the potential market for this offering.”
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