UBS has shuttered its outsourced trading business, the UBS Execution Hub, for global markets clients. The decision brings the purported success of the strategy into question.
Those familiar with the situation say that the decision is part of resource reallocation for the global markets. More broadly, the firm as a whole is reorganising its business plans following last year’s merger with Credit Suisse.
Just a few weeks ago, Ian Power was appointed head of the Execution Hub service. UBS has not confirmed his new role within the company.
In a statement, a UBS spokesperson said: “In the fourth quarter of 2024, our global markets division recorded its highest quarterly market share gain for cash equities and the highest prime brokerage balances ever. We continue to focus on growth and remain dedicated to our clients as we service them through our broad and leading global markets offerings.”
Outsourced trading allows firms to expand their coverage geographically and across asset classes, and is often used to minimise operational costs. However, concerns have been raised by market participants that engaging such a service reduces the value managers can pass on to clients.
The strategy is a significant source of revenue for providers, although most are hesitant to disclose their earnings details. UBS is no exception, with figures for the Execution Hub not published.
Clients using UBS’s Execution Hub will be offered alternative services from the global markets division. It will remain available for global wealth management and ‘banks for banks’ users for the foreseeable future.
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