On the surface, many providers look similar. Execution? Check. Global reach? Check. Integration, partnership, scale? All there. But you need to dig deeper for the whole story. What matters is how the desk is set up to deliver on its promises, and who it was designed to serve from the beginning. Because not all outsourced trading desks are wired the same way. And when you hand over your trading, that wiring matters.

Built for the buy-side

Some desks were created specifically for the buy-side – designed to act as an extension of the investment team, with broker agnostic routing, no internal conflicts and a flexible operating model built around the client.

Bobby Croswell

Others were carved out of institutional execution teams or broader infrastructure platforms, extending existing capabilities to external clients. These models often bring scale but carry the muscle memory and operating frameworks of their institutional roots. Many fall somewhere in between.

These differences aren’t always visible upfront, but they influence everything: how the desk fits into a client’s workflow, how decisions are made and how the relationship holds up once the pitch deck is in the drawer.

“What matters is how the desk is set up to represent you,” says Bobby Croswell, co-head of Americas outsourced trading at Marex. “And whether they’ve built the business around your needs or through a wider institutional lens.”

Structure sets the tone

Outsourced trading is, at its core, an extension of a firm’s trading function. And structure determines how well that extension actually works.

You see it in the details. How trades are handled, how fast issues get resolved and what happens when the client needs something outside the box. Is the team aligned to the client’s goals, or navigating internal ones? Can it flex around different systems and styles? Can it scale as the business grows, or do things start to creak once it gets complex?

Marex’s outsourced trading desk was built with those considerations in mind – established over 25 years ago as a standalone buy-side desk, designed to operate like an internal trading team.

“Our desk was purpose built for the buy-side from day one,” adds Croswell. “That mindset still shapes how we hire, how we operate, how we support clients. But we’ve also built the depth to mirror the institutional scale our clients expect – across the trade lifecycle, asset classes, time zones and operational complexity.”

Today, it sits within Marex’s capital markets division, running independently from the firm’s commodities and clearing operations.

Massimo Labella

It’s a structure that offers the best of both worlds: the alignment and flexibility of a buy-side built, pure agency model, paired with the scale and support of a global financial services firm. No competing internal sales desk. No routing pressure. Just a desk that can flex with the client, and scale with them too.

“The structure lets us focus entirely on the client,” adds Massimo Labella, head of international outsourced trading at Marex. “When that’s right, everything else falls into place and the experience becomes something entirely different.”

Built for how you work

Flexibility isn’t a nice to have; it’s the reason many firms outsource in the first place. But flexibility only matters if the desk is set up to deliver it.

“We can face the street as the client or as Marex. Trade in their name or ours. Use their brokers or ours. That kind of flexibility sounds obvious, but very few desks are actually structured to offer it,” adds Croswell. “It also means firms don’t have to outsource everything. Some use us to add capacity, capability or reach to their internal desks.”

Marex integrates into client systems where needed – plugging into OMS platforms, managing FIX connectivity and aligning post-trade files. And where clients don’t yet have that infrastructure, Marex offers institutional-grade frameworks for clients to build around.

“It’s not just about getting the trade done,” says Labella. “It’s about helping the client run their desk more efficiently and extending their capabilities in a way that would be hard to replicate internally.”

More than execution

Execution is just the start. What defines a strong outsourced trading relationship is everything around it. That’s also where outsourced trading is often misunderstood. It’s not the same as execution only desks. The models, and what they’re built to deliver, are very different.

Execution desks provide access to markets. That can work for firms with large internal teams, but it leaves everything else – broker management, operations, compliance, post-trade – in the client’s hands.

Outsourced trading, when done properly, goes further. It’s about acting as an extension of the client’s team – creating opportunities, managing complexity, reducing friction and supporting growth.

“Clients aren’t just looking for access to markets,” says Labella. “They need support across the trade lifecycle, from compliance to reporting, broker management to capital raising. That’s what allows them to scale without building it all themselves.”

Marex’s support spans 24/6 global coverage, multi-asset execution and post-trade across time zones. Clients also access a global capital introduction team connected to more than 1,900 investors, along with research and corporate access via Marex’s partnership with Stifel.

“Some firms just want help routing orders, that’s a valid need,” says Croswell. “But others want a partner who can take on the operational lift, that’s something else entirely. And that’s what we’re built to do.”

Fit still matters

One theme that comes up time and again: fit. Not just the operational aspects, but the people and the service clients experience day-to-day.

“You can feel it,” says Croswell. “You know when someone’s really in the trenches with you versus when they’re just covering an account. It shows up in how quickly things move, how responsive the team is and how problems get solved.”

A desk built with buy-side clients in mind tends to onboard faster, adjust more easily and work more collaboratively with the client’s firm. And the difference is noticeable.

That level of fit is supported by strong trader-to-client ratios and direct access to the team actually managing the flow. No ticketing systems. No bouncing between departments. Just people who know how you operate and can act quickly when needed.

“Good outsourced trading feels like an extension of your desk,” adds Labella. “Not a bolt-on service. Clients want service that fits them, not the other way around.”

Reputation, resources and reach

As the model matures, firms are asking smarter questions. Who’s actually running the trades? What’s the trader-to-client ratio? What happens when something goes wrong? Can the desk scale with us, or will it become a bottleneck?

“Experience counts,” says Croswell. “If a desk has three junior traders covering 40 clients, it doesn’t matter how slick the front end is, that’s not a sustainable setup.”

But it’s not just about numbers. Clients want to know that the team representing them in the market has the judgment, depth and resources to support them through all market conditions.

“Clients are asking the right questions,” says Labella. “Not just ‘Can you do it?’ but ‘What happens when it’s hard?’”

And that’s where structure proves its value.

“If a desk wasn’t built for the buy-side,” Labella adds. “You’ll feel it – in the service, in the communication, in the way challenges are handled. Long after the ink dries on the agreement.”

Final word

Outsourced trading has become a strategic choice for many firms, but strategy only works when the structure behind it is sound. The best desks aren’t just capable. They’re aligned. Built to represent the client, adapt around them and support growth without compromise.

In a market where many desks look the same on paper, the difference shows in how they work in practice. The ones built for the buy-side from the ground up continue to prove why structure – and service – still matters most.

The post Built to fit: The DNA of a buy-side outsourced trading desk appeared first on The TRADE.

John Courtney

John Courtney: Ultra-low latency solutions are a specific part of the fintech trading market, where a special technology solution is co-located at the exchange. The consumers of this technology are generally electronic market makers and proprietary trading firms seeking a competitive advantage in trade execution. We are, however, seeing a change in the asset classes that companies are trading. Traditionally, it has been equities and options, but increasingly firms are trading foreign exchange and cryptocurrencies in this marketplace.

Ultra-low latency FPGA solutions can optimize the full trading pipeline high frequency traders use, but there are additional advantages in pre-processing of market data to filter irrelevant information before being processed by the trading algorithm. FPGAs can provide inline processing at network speeds, filtering data with virtually no lag time, so compute resources can execute the trading algorithm faster and more efficiently.

Micheal McGuirk

Another consideration for traders is the many regulations they must follow. The trading solution – an ultra-low latency card in this case – must  comply with the relevant trading regulations and provide accurate, up-to-date records in a compliant manner. This increases the processing and latency burden for a sector that’s extremely sensitive to trade execution performance. Additionally, we’re now seeing machine learning (ML) on these cards, further increase the computing demand.

Micheal McGuirk: In addition, as the arms race for being the fastest performing technology continues, we’ve seen an increase in HFT firms shifting to FPGAs away from CPUs. In situations where every nanosecond counts, you can do inline trades and FPGAs at the nanosecond level which not quite possible for CPUs.

What are the driving factors behind this? 

Courtney: One factor is firms are simply trading higher volumes of stocks, but there is also a growing number of retail investors, placing orders via brokerages, who require ultra-low latency trade execution. This trend is a potential target for HFT and growth driver for ULL technology.

McGuirk: With that growth, there’s a need to stay competitive. Anyone in this space needs to review all their options from a technology perspective and, importantly, make sure that you stay ahead of the curve from a technology perspective. This continues to drive the need for new and faster technology in this space.

What role is AI playing in this space and how is this developing?

Courtney: Initially, AI is enabling the discovery and development of better trading algorithms. That’s typically by recognizing patterns and discovering features in the data streams which can be manipulated at the trading level. But increasingly, it’s become possible to attach an ML processing solution directly to the pipeline on the trading card. That can assist the trading or it can even perform the buy/sell decision.

McGuirk: If you think about it from the perspective of everything going towards lower latency, we’re reaching the point where we can’t get any lower in latency from a hardware perspective. If you can’t get any faster, can you get smarter? That’s where AI comes into the trading pipeline to help you make smarter decisions and give you the advantage, particularly when you’re already operating at maximum speed.

How does demand/use cases for ultra-low latency trading differ between different firm types? E.g. asset managers vs hedge funds?

Courtney: Not everybody uses low latency trading, and the question might be why? Asset managers typically focus on asset growth, stability and wealth preservation, so they are less focused on low latency trading. Hedge funds and proprietary trading firms are the opposite. They do engage in low latency HFT, where technology choices and the associated investment will determine returns and overall competitive advantage. They’re looking for gaps in the market where they can essentially insert themselves in the middle of the transaction and make a profit. An example is latency arbitrage, where traders look for an advantage in price difference between two exchanges, allowing them to buy at the lowest price on one exchange and sell to the highest bidder the other exchange before prices are aligned. Different firms use different strategies linked to their trading technology.

How can an ultra-low latency FPGA solution landscape be further developed through open APIs and interoperability?

Courtney: At AMD we supply the FPGA cards and there’s an ecosystem of vendors who provide other technology solutions to trading firms. One example is APIs and interoperability solutions which are important for firms interacting with compliance platforms.

All trading solutions consist of trading algorithms and networking. To make a trade you must send trade orders to the exchange, and that’s a networking function. You do have partners or vendors in the ecosystem who will supply network protocol solutions so traders can focus on their core business of trading. Traders don’t need to focus on networking technologies. This is something they should use an outside partner for, as these solutions offer standard interfaces for networking functions.

McGuirk: As competitive as the trading industry  is, the main players want to focus on how to add value. The partner ecosystem is primarily where this is done, as well as at conferences where the industry gets together to discuss the advancement of the technology. While it is competitive, there’s general interest in moving the technology along and encouraging interoperability between technologies and solutions.

How does the latest AMD FPGA fit into a trading firm’s overall technology stack, particularly in terms of integration with existing trading systems, data feeds, and software applications?

Courtney: Our latest FPGA—the AMD Alveo UL3422 FinTech accelerator, offers two use cases. The first is where the financial institution is already engaged in HFT. The Alveo cards are designed to fit seamlessly into existing server and trading stacks, built on a 16-nanometer silicon node, which is well-known and widely deployed. The main innovation in this card was around the transceivers and reducing the latency by up to 7X over the previous generation AMD FPGA FinTech accelerator¹—which is not easy to do in a single generation.

We also introduced an ultra-low latency integrated Ethernet MAC an as part of the solution, which is a standard IEEE networking function.

The second use case is more nuanced—CPU offload. If you are not already an FPGA user, there’s a well-trodden route you can still go down. You can gradually offload your software stack onto hardware. There is value in doing the simple protocol operations in an FPGA to offload your CPU, and that would be the place to start. There’s a big ecosystem of partners AMD  works with for traders who want to migrate from software-based trading to AMD hardware acceleration.

McGuirk: FPGAs perhaps have the perception that they’re very difficult to use, and that’s because if you’re not familiar with the technology, you do need FPGA developers to implement the trading algorithm (or portions of it) in hardware. We do, however, have many ecosystem partners that can ease that transition with pre-built trading frameworks and FPGA IP to accelerate the design flow.

Given the diverse compute technologies available for algorithmic trading, such CPUs and high-speed NICs, how does one choose a technology platform and where does FPGA trading fit in this spectrum of solutions? 

Courtney: Software-based solutions are by far the easiest and most flexible to deploy and are low cost. But software-based solutions also have limited performance when compared to hardware accelerators. Even if you have highly optimized software solutions with the high-speed NIC, the latencies are in the milliseconds (compared to nanoseconds of hardware accelerators). Additionally, as the CPU becomes busy with processing, you get poor repeatability and scalability, and that’s unavoidable. If you want to get the best performance and the rewards from winning the low latency race, you have to invest in a hardware solution. FPGA card-based trading is the most flexible way of doing that.

The other alternative is to use a full ASIC solution, but that is a very large investment both in time and money, with limited flexibility as modern trading algorithms evolve. AMD has  developed an FPGA solution to the point where it stays competitive to an ASIC solution. It gives you ASIC-like hardware-accelerated performance, relatively short development times, and total flexibility. If you need to change your trading algorithm quickly, you can do that immediately.

McGuirk: At AMD, we’re lucky to be purveyors of all these types of technologies. Most customers are choosing CPUs and NICs for the applications where it’s the best cost performance benefit and choosing FPGAs where they want to compete in the ultra-low latency race. It’s important to look at your overall trading strategy and what applications you want to run and where, and to choose the appropriate technology across CPUs, NICs, FPGAs and GPUs, as well.

1: Based on an AMD comparison of simulated latency in February 2024, using the Synopsis VCS 2019.06-SP2 ultra-low latency Virtex UltraScale+ VU2P GTF transceivers versus GTY transceivers (ALV-15).

The post FPGAs and the future of high-frequency trading technology appeared first on The TRADE.

Xetra Midpoint serves a wide range of participants, from international banks and proprietary trading firms to member firms who are active on domestic venues and have long sought reliable dark pool access within the Frankfurt Stock Exchange framework.

With new clients onboarding and active clients ramping up their trading activity, turnover has increased constantly, from about €2 million average daily volume traded (ADVT) in December 2024 to €3.3 million in January 2025 and €9.2 million ADVT in February 2025. In March 2025, at the time this article was written, the highest daily turnover so far was EUR 30.8 million.

Liquidity on Xetra Midpoint has a unique profile compared to other dark pools in Europe. It has a distinct active and growing client base, and real-time reference prices which eliminate adverse selection risk coming from stale prices and latency arbitrage – something which occurs frequently on other venues.

Two different order types for Xetra Midpoint trading

Xetra Midpoint is a trading model under the exchange rules of the Frankfurt Stock Exchange that is exempted from pre-trade transparency under a Mifir reference price waiver. Midpoint orders in the Xetra Midpoint order book are never displayed and can be equipped with order limits to prevent execution if the prevailing midpoint price is beyond that limit, and a minimum acceptable quantity (MAQ) to make sure the order is not partially executed below the defined size.

Clients can trade the real-time midpoint of the best bid/best ask spread of Xetra’s central limit order book during lit continuous trading. The technical design ensures that all incoming orders are strictly sequenced across both order books and are processed one-by-one in the same central matching engine, with the reliability and speed that clients can expect from the T7 trading system.

This is the technical foundation for Deutsche Börse Cash Market to also offer a dark-to-lit sweep order that has no latency disadvantage compared to orders going directly to the central limit order book – a “no regret” option for a price improvement.

Sophisticated matching logic facilitates timely execution of the highest possible volume

Orders in the Xetra Midpoint order book are prioritised by their volumes and their entry timestamps (in case of identical volumes), and under consideration of individual MAQs. The matching algorithm of Xetra Midpoint combines the advantages of auction mechanisms and continuous trading, facilitating immediate execution at order entry, and orders are matched in a way that maximise the overall executable volume across both sides of the order book at the current midpoint price. Executions can take place with every order entry (or modification) into the Xetra Midpoint order book, but also with each event in the central limit order book that results in a new midpoint price. This ensures that resting midpoint orders interact seamlessly with incoming sweep orders, other midpoint orders, or a combination of both.

How is liquidity building up in Xetra Midpoint?

While Xetra Midpoint trading is available for more than 350 equities and well above 1000 ETFs, initial liquidity is naturally concentrated on DAX shares where more than 80% of the overall volume has been traded so far. Across all instruments, as per end of February, 53% of all trades were “midpoint order(s) against midpoint order(s)” and 47% were “sweep order against midpoint order(s)”. Interestingly, around 15% of all midpoint orders, which together account for more than half of the entered order book liquidity, use MAQs.

Of these, the orders that are disproportionately likely to be executed are those with an MAQ around the average trade size. Clearly because they are larger, but maybe also because traders feel more comfortable to leave these orders in the book for longer. The average trade size in Xetra Midpoint is currently in the typical range between €5,000 and €9,000 for different shares, however, the largest single trade on Xetra Midpoint so far took place in the Deutsche Telekom share and was above €1 million.

It is a very positive sign that the increase in trading volumes that we have observed is mainly generated by additional genuine midpoint liquidity that is routed to the market as more and more clients integrate Xetra Midpoint into their algo wheels for dark pool executions, or intensify their prop trading activities.

A substantial fraction of midpoint orders come with a “good for day” validity, meaning the order is ready to sit passively on the book. However, even today, notwithstanding any further ramp-up activity that we see, there is ample room for additional midpoint executions as the volume of midpoint orders currently entered far exceeds the volume executed.

The Xetra Midpoint order book is dark which makes it difficult for traders and algos to target this liquidity. The easiest way for Xetra participants to tap this liquidity is to use sweep orders by default when trading in the central limit order book. This “liquidity

spillover effect” will automatically increase fill rates and the execution speed of passive midpoint orders and will ultimately also lead to attractive midpoint trading opportunities in those shares where there are currently only few or no executions.

Xetra Midpoint’s sophisticated design offers a compelling solution for participants who seek dark execution or price improvement for their aggressive trading strategies or want to place high-priority passive orders without the risk of adverse price movements. Volume-time priority, precise midpoint pegging and strict order sequencing thoroughly complement Xetra’s central limit order book, offering new opportunities for efficient and effective trading. Visit www.xetra.com/midpoint to learn more and sign-up for our Xetra Midpoint Newsletter.

The post Xetra Midpoint – New dark pool at the heart of price discovery appeared first on The TRADE.

In March 2024, the Bank of Japan (BoJ) ended 17 years of negative interest rate policy, beginning the process to normalise interest rates as prices continue to surpass 2%. The 10-year JGB yield recently exceeded 1.5% for the first time in nearly 16 years, signaling significant movement in the interest rate world.

Meanwhile, uncertainty has roiled the global economy since the beginning of 2025, leading to increased volatility in equity and currency markets. Against this background, there is growing demand for Japanese derivatives among traditionally conservative Japanese financial institutions and overseas investors who are major players in the Japanese derivatives market.

In Japan, equity derivatives trading volume makes up 93% of all derivatives traded at Japan Exchange Group (JPX) as of 2024. Notably, Nikkei 225 and TOPIX futures, primarily traded by institutional investors, both reached record-high transaction volumes in 2024.

To further strengthen the equity derivatives market ecosystem, the Osaka Exchange (OSE) under JPX has specifically targeted development of the single stock options (SSOs) market and the introduction of short-dated equity index options as its next strategic priorities.

SSOs have seen active trading in the US, Hong Kong and other markets, but in Japan, their trading has been limited to a small group of investors, resulting in lower market liquidity relative to the massive size of the stock market.

To address this imbalance, market makers began providing liquidity for 12 SSOs – comprising two ETF options and 10 individual stock options – last year. At the same time, a new online broker began offering SSOs services to retail customers in Japan. This boost in transaction flow has led institutional investors

to adopt strategies such as covered calls, and February 2025, trading volume for SSOs reached JPY 16.6 billion on a notional basis, marking the highest level since market making began.

Philippe Imhoff, senior vice president and head of convexity solutions (Asia) at Amundi Japan K.K., commented: “The utilisation of SSOs could offer a way to finance protection strategies on indexes, for example, by benefiting from higher premiums on SSOs on which the fund manager has a view. It would be great to see the SSOs and market become more active, and I hope that the efforts of OSE and the market makers will foster a robust single stock option ecosystem, one that asset managers can leverage.” Imhoff expressed optimism about the growing liquidity in the Japanese SSOs market and increasing adoption of SSOs by institutional investors.

To capitalise on these opportunities, OSE plans to attract more market makers and aims to increase the number of SSOs for which liquidity is provided from the current 12 to around 30 by the third quarter of 2025.

In line with recent global market trends, OSE will introduce Nikkei 225 Mini (Weekly and Monthly) Options, short-dated options that expire on Wednesday on May 26, 2025 to complement the existing Friday expiration. These additional expiration dates will allow investors more flexibility to hedge against short-dated event risks.

Recently, demand from domestic and foreign institutional investors to trade quantitative investment strategy (QIS) products has been on the rise in Japan. David Dredge of Convex Strategies Pte Ltd. emphasised the operational benefits of having access to QIS strategies through a variety of listed derivative products. He expects increased liquidity in the listed market, saying: “We expect both direct and indirect use of QIS-type strategies to be a key driver of growth in the listed futures and options markets.”

In addition to the new product development, enhancing market transparency and reliability is also key to success. Imhoff of Amundi Japan remarked: “OSE has recently improved the accuracy of settlement prices and we were quite happy to see strong levels during the peak of the market turmoil in Japan in August 2024.”

As we move into 2025 and market uncertainty grows, institutional investors need to be prepared for increased volatility. While investment in the Japanese equity market increases, further development of its listed equity derivatives market will foster a more efficient and fair market environment.

The post Japan’s equity derivatives market set to grow in 2025 appeared first on The TRADE.

Alex Dalley

While European equity volumes increased in 2024 year-over-year, the longer-term trend is still one of decline. In other correlated asset classes, such as equity options, Europe has also significantly lagged other regions over the last decade. The notion, then, of how to improve European “competitiveness” on the global stage has been a topic of discussion for many years. But this year, with a new European Commission and several new national governments in situ, we might see some meaningful progress towards promoting more efficient and integrated European markets and the removal of barriers to growth.  

The key question that remains unanswered is how this change could be brought about – whether it will be driven by top-down by policy makers, or through market-led innovations and initiatives.  

At Cboe, we firmly stand on the latter side of that argument, because all of our of businesses are pan-European by design, based on the principles of competition, choice and open access, and have been built in partnership with clients. Our ultimate objective, as the operator of pan-European exchanges and clearing houses – whether it be equities, equity options and futures or securities financing transactions – is to create more efficient markets by fostering competitive dynamics and empowering user choice.

Unlocking participation by retail investors

European policymakers are increasingly recognising the benefits of a more engaged retail investor base. 2025 will see further strides across the industry to unlock participation by this community in exchange-traded products as a result of regulatory reforms, a greater emphasis on investor protection and the impending full ban on payment for order flow by 2026.

At Cboe, we’ve witnessed firsthand the benefits of a highly engaged retail community on our US, Canadian, Japanese and Australian exchanges and understand the importance of education and accessibility in this context. Educational programs, like those from Cboe’s Options Institute, which is expanding into Europe this year, are crucial in equipping retail investors with the knowledge and tools to understand and use financial instruments like equity options to manage risk, thereby encouraging their participation.

The onus for improving retail accessibility will fall on exchanges and brokers including neo brokers that are increasingly setting up in Europe with mobile-first apps that make exchange-traded products more attractive to retail investors. On our part, we will continue to lower barriers to entry for investors of all types and, having already implemented a dedicated fee program for retail-attested equity orders, we plan to further strengthen our retail proposition with an offering that appeals directly to retail brokers and the intermediaries executing on their behalf.

Trajectory crossing gathers momentum

The secular growth in systematic and passive investing is projected to rise further in 2025, leading to an increasing proportion of customer flow being transacted via participative and schedule-based algorithms.

It was against this backdrop that Cboe launched Cboe BIDS VWAP-X late last year, a first-of-its-kind venue-based mechanism which allows participants to use conditional indications of interest to match scheduled volume for execution at a forward VWAP price. With similar venue-based trajectory services having gained traction in the US and now familiar to many participants, we believe the timing is right to bring this market model to Europe.

While many brokers have developed their internal trajectory crossing capabilities, venue-based services can complement these efforts in several ways. They can offer a larger pool of liquidity and greater opportunities for matching natural buyers and sellers with a common execution objective and benchmark, introduce a standardised, exchange-regulated VWAP price methodology, and also provide greater transparency with trades reported under discrete but public MIC codes. While we’re disappointed by the recent ESMA proposal that could limit the availability of trajectory crossing within the EU venue ecosystem, to the disadvantage of EU-based investors and brokers, we remain focused on growing the user base of this platform in the UK and continue to engage with regulators as we seek ways to extend the service to include EU equities.

Keeping innovation alive in lit trading

With closing auctions reaching record highs as a proportion of overall trading and continued growth in OTC and other forms of bilateral trading, exchanges and trading venues will need to work hard to maintain a strong value proposition for their lit markets. This will include better highlighting the unique characteristics that each lit book offers by focusing on market quality metrics.

Similarly, periodic auctions are expected to see further adoption after a stellar 2024, accounting for around 10% of continuous trading by the end of the year.

These lit auction venues offer well-established and proven benefits around price determination, price improvement and market impact. The next phase in their evolution will see them move from being largely  midpoint venues to facilitating execution across the spread range.

Decision time for consolidated tape providers

It would be remiss not to mention the consolidated tape! By the end of the year, we’ll know which entity regulators have chosen to operate the EU consolidated tape for equities.

As one of the most significant market infrastructure developments introduced by the EU in many years, this decision carries enormous weight. If well-run and governed, the tape could help attract global capital flows by increasing the visibility of European issuers both within Europe and internationally, while making European markets simpler and more cost-effective to access.

To achieve these goals, the selected provider must possess the necessary technical, operational, and commercial expertise and be aligned with policymakers’ vision and objectives for the tape. Even though Aquis and Cboe decided against participating in the tender process to run the tape through SimpliCT, we remain a key advocate of the initiative and will continue to seek to engage constructively with all efforts to deliver a tape that meets users’ needs.

The post Cboe’s five European market structure topics to watch in 2025 appeared first on The TRADE.

Carl Hayes, James Baugh

Leading this effort is Carl Hayes, head of European cash equities, who brings extensive experience from his senior roles at Cowen, Deutsche Bank and HSBC Securities. Since taking on the role last year, Carl has enhanced the firm’s client offering, working alongside James Baugh, managing director and head of European market structure. James’ expertise in liquidity strategy—developed at Cowen, Citi and the London Stock Exchange—helps guide the firm’s approach in a complex trading environment. 

In this interview, Hayes and Baugh discuss priorities, milestones and what’s next for the firm. They offer their insights on navigating liquidity challenges, adapting to regulatory shifts, and helping clients find opportunities in an increasingly fragmented market. 

Carl, what have been your main areas of focus since stepping into your role? 

I took over the role in mid-July, at a particularly crucial and exciting time for us. One of the key milestones during this period was the full launch of our international and US equities trading model in our TD Securities’ Dublin entity. This means we can now execute for continental European clients, something that was previously very limited before the TD Securities acquisition due to complex Brexit regulations.  

We have since rapidly grown our Dublin operations, including onboarding a team of four sales traders to help build out that business. In addition, we’ve hired a prime expert in Dublin to help our North American prime brokerage business as we globalise that platform and extend our synthetic prime solutions offering to our European clients. 

We also work very closely with our colleagues at TD Securities and across TD broadly to offer our clients a true full-service, multi-asset class execution platform. This evolution aligns with the needs of our global institutional clients, and we are well-positioned to deliver on those expectations. 

We are extremely proud of what we have achieved in the last five years – first under Cowen, which later became TD Cowen before our transition to TD Securities in December. Now we’re looking ahead to the next five years, including what we can build to better service our clients to make sure they get the results they need. We are taking a very strategic approach to defining our next steps and we expect multiple exciting announcements over the next 12 months. The foundation is there — it’s proven that we have the right team and expertise in place and now it’s about expanding on that success to deliver even greater value to our clients. 

James, how do you see the European equities market evolving? 

The European equity markets—particularly the secondary markets—are at quite an interesting juncture. On the one hand, we’ve seen an increase in bilateral liquidity provision which has taken a chunk of liquidity out of the public markets. On the other hand, we are starting to see interesting innovations emerge, such as dark midpoint books, periodic auctions and benchmark crossing opportunities. While these innovations bring fresh possibilities, they also exacerbate an already fragmented landscape for publicly addressable liquidity. Net-net, while competition and innovation are a good thing, such as potentially lowering the explicit cost of execution, we also see this undermining execution performance and ultimately leading to an increase in the implicit cost of trading for our institutional clients.   

Layered on top of this are the impending regulatory changes which could positively or negatively impact liquidity dynamics. Notable among these is the introduction of a consolidated tape and the implementation of a new single cap for dark trading in Europe, set to take effect in September. 

When we think about the secondary markets, we also must consider the fact that we remain hostage to the lack of primary issuance in most European markets. Without more inward investment, the velocity of trading in European names is going to remain under some significant pressure. There’s a myriad of reasons why Europe finds itself in this position, but I firmly believe that more transparency and perhaps less fragmentation in the secondary markets, could—alongside several well-documented initiatives in the primary space—help reverse the downward trend as the international community looks for new investment opportunities. 

How are you helping your clients navigate this environment? 

All of this complexity and fragmentation of liquidity makes it difficult for institutional clients to find natural block liquidity and it’s not getting any easier. I’d say that those who partner with brokers who have a deep understanding of liquidity dynamics and take a strategic, thoughtful approach to engaging with available liquidity in real-time will be best positioned to achieve outperformance and reduce implicit trading costs. This should ultimately help drive fund performance. 

TD Securities’ ability to grow our business in Europe has been driven by a clear grasp of these complexities. More significantly, it’s our razor-sharp focus on execution quality aimed at reducing implicit costs of execution that sets us apart. This focus is complemented by a hands-on, highly experienced approach to coverage. Not just across high touch, but across the entire stack, including our electronic, low touch platform. This comprehensive framework has allowed us to tailor execution outcomes to meet individual client objectives.   

It’s important to emphasise that when we talk about implicit versus explicit costs of trading, the implicit costs are far more relevant than the explicit costs of execution when working those larger multi-day institutional block orders. 

We are very excited about being able to offer European clients better execution outcomes and lower costs of execution, and that’s really going to be the area of focus for us over the coming months and years. 

Carl, against this backdrop, what’s next for TD Securities? 

We’ve been on a tremendous growth journey over the last five years. Taking that to the next level, in what is undoubtedly a challenging market, is exciting for all of us. With one of the strongest teams in the industry, we’re exceedingly well-positioned to lead our clients through increasingly complex and volatile equity markets while continuing to deliver best-in-class execution services. 

Looking ahead, our focus is on building our business and continuing to find new ways to help our clients better execute. We have several exciting initiatives in the pipeline to achieve this and further enhance the value we bring. 

As some of the larger global banks consolidate more of the market, our ability to offer clients a genuine alternative whilst maintaining the best-in-class execution we are known for, is a good news story for the market. Being able to take this approach to a much wider audience is a huge opportunity and I’m confident that this business will grow exponentially in the years to come.  

The post From Cowen’s growth to TD’s vision: A new chapter in European equity trading appeared first on The TRADE.

BestX is a technology company that allows clients to assess the quality of their execution in FX, fixed income, equities and crypto markets. The platform operates as a utility to both buy- and sell-side firms and responds to the demand for increased transparency of costs in the wake of an evolving regulatory environment.  

BestX has continued to evolve across all asset classes, with each asset class having its own unique analytics layer, computing metrics specific to that asset class, eg: VWAP in equities, WMR in FX, far touch in fixed income. The consistent UI framework and functionality allows for common cost metrics to be brought together across all asset classes, for any multi-asset reporting requirements. 

Independent analytics available on BestX allow clients to define, achieve and record a process of best execution. The technology covers the full life cycle of a trade, from pre-trade counterparty selection to post-trade results and automated outlier detection. 

BestX clients can codify their best execution process, making more informed decisions to help improve results. The reporting functionality allows efficient broker and asset owner reviews, which can be run on demand or can be automated. comprehensive transaction cost analysis (TCA) is underpinned by representative and independent market data sources, where BestX consumes and stores over one billion price updates per day – which we believe is the broadest and deepest in the TCA space. 

Could you outline some of the main achievements and milestones from the year? 

BestXecutor: 

We’ve had a number of key enhancements, but to highlight a few: The new tool allows clients to see real time analytics at the point of execution. This includes showing within FXConnect the optimal panel size and counterparty mix for each individual RFQ trade, as well as displaying the best performing algo based on the client preferences. 

This is an industry first in terms of having two-way communication between an EMS and a TCA provider, taking the communication between EMS and TCA to the next step allowing the feedback loop to close by feeding pre-trade information from BestX back into the EMS and automatically selecting the best performing counterparties based on the client’s specific broker list. 

This new functionality enhances the user experience and streamlines clients’ workflows by removing the back and forth currently required between multiple screens and platforms to select the optimal execution method.  

Custodial peer pool: 

As highlighted in our article “The Good, The Bad and The Ugly of Custodian FX” we have recently released the ability for those clients who have opted in to the community data pool to evaluate their trading performance against peer trades within the custody community data pool. When BestX first launched peer analysis, custodian flow was excluded as most files sent to us lacked timestamps.  

As this has now changed for the biggest custodians, we are now sitting on over four million timestamped custodian trades for our clients. Therefore, we are now introducing the data as an additional community data pool (for opted-in clients) which can be filtered and isolated to allow for peer comparison of custody data – whilst excluded from in-house analysis and comparisons. This is to help our clients understand how we are simplifying workflows for oversight and corporate governance, whilst addressing some misconceptions and highlighting existing problems. 

Historically, discussing custody data has always been a challenge due to the lack of transparency in this space. BestX has invested time with numerous custodians over the past few years and, because of this, the data quality has dramatically improved resulting in better oversight and control from the buy-side. In the chart below, we can see that both the average spread and standard deviation of the spread improve along with the time. 

This is again testament to the fact that BestX has become instrumental in driving transparency and collaboration in the FX industry. 

Cost to replace: 

The cost to replace metric was introduced in our last release to quantify the value add of each bank measured as the cost to cover every time they win an RFQ. This will help easily identify the most valuable counterparties.    

Launch of fixed income pre-trade: 

Fixed income TCA is one of the most challenging given the varying levels of liquidity, market data and effective benchmarks. BestX fixed income TCA has one of the deepest data sets available ingesting data from ICE, Refinitiv, MarketAxess, IHS Markit and Tradeweb creating a broad coverage across the cash FI universe.  

Our new pre-trade module now allows clients to submit a target ISIN code with an intended size and direction and subsequently be able to see an expected cost, liquidity score and the competitive liquidity providers. 

In addition, we are now able to produce a list of similar bonds to that target ISIN, which can be configurable by issuer, coupon type, and seniority. 

Equity peer analytics  

BestX launched an equity peer analysis module to add to our existing offering for FX. This would allow users to benchmark their trading performance against their industry peer or across the group of all BestX clients offering insights into execution quality and understanding areas of improvement.  

How do you plan to build on this success? 

Innovation and partnership with our clients around our product development agenda remains the cornerstone of BestX. This includes further analytics and functionality in BestXecutor, to enable clients with enhanced analytics around their decision point to execute a trade as an algo or RFQ, enhancements in our fixed income pre-trade to allow further insights into market liquidity and axes, a fixed income peer pool and equity pre-trade. BestX’s mission continues to be to offer an analytics tool to help clients record, define and achieve best execution and to ultimately help create better outcomes for the world’s investors and the people they serve. 

The post BestX reflects on a landmark year: Innovations in real-time execution analytics, FX transparency, and enhanced market insights appeared first on The TRADE.

There is a misconception that any executing broker can call themselves an outsourced trading “OT” provider. Firms may market their services as being OT, but are often merely offering an agency trading desk to capture commissions for services offered. This service can only be delivered with the proper infrustructure and coverage model in place, with the ability to route orders in a way that fits the fund’s needs. Differentiating the service offerings is becoming very critical for managers.  

In addition to trading, the service delivers a robust coverage model with robust communication with the client about their portfolios, portfolio holdings, sector and market news. The service also delivers operational and technological responsibilities, which reduce a fund’s pre- and post-trade lift as well as the ability to manage the client’s OMS.  It also provides clients with a robust set of reporting capabilities and client service from a settlement perspective. 

What are some lesser-known details that your approach to outsourced trading is solving for? 

Cost efficiency 

The OT function allows managers to leverage the economies of scale that we have built over the last decade – multi-asset class trading infrastructure, technology, and personnel across multiple trading time zones. 

Anonymity and attribution 

A proper OT model allows for complete anonymity of client orders, and is able to get funds the commisison attribution for the trades they want executed with the brokers providing them services. This is especially true for funds who may be large owners of names (e.g. activist) who appreciate that they can enter or exit names without the brokerage community knowing that they are active in the name. 

Access to brokers and liquidity 

With connectivity to hundreds of global brokers and liquidity venues, access to liquidity can be maximised, clients piggyback the benefit of all this market and liquidity access that they would not have themselves, simply because no one fund typically sets up as many liquidity venues or broker relationships that an outsourced trading provider does. 

Working inside a client OMS 

An outsourced firm should offer the ability to manage the client OMS, which includes staging orders, handling pre-trade checks, monitoring all positions, routing to various brokers, consolidating trade files and managing the end of day process.  

Transparency and LP adoption 

The evolving expectations of asset owners and investors are influencing the adoption of outsourced trading. Transparency, best execution, and fiduciary responsibility are now paramount concerns. We are equipped to meet these demands and can provide detailed reporting and analytics that demonstrate compliance with best execution standards. This level of transparency not only satisfies regulatory requirements but also builds trust with investors, enhancing the overall attractiveness of outsourced trading solutions.

Trade cost analysis 

It is especially important for funds to receive a transaction cost analysis (TCA) report at a minimum once a quarter, run by a third party.  This is a fund’s scorecard for execution performance.

Minimising potential conflict 

JonesTrading is an agency-only business. OT providers with proprietary trading desks, internal dark pools, self-clearing broker dealers, internal securities lending desks, and fundamental research offerings all could create potential conflict of interest for the manager.  Knowing that your OT provider is never trading “against you” is peace of mind for most managers. 

Reduced counterparties and FIX lines 

A robust OT provider has built connectivity to hundreds of brokers and venues. The fewer brokers that a fund faces for clearing, the better from a workflow and post-trade perspective. It also helps to minimise counterparty risk concerns for the GP’s and LP’s during their due diligence process.  Outsourced trading also consolidates the settlement process and mitigates operational strain by leveraging the back- and middle-office team to take on those functions.  

Commission management and reporting portal 

OT helps fund managers budget brokers and ensure the right types of orders are going to those brokers, including the prime brokers. Jones has built a proprietary OT portal that provides clients with a depth of information on trading activity, counterparties, commission wallet and best execution.  OT providers are also able to function as a soft dollar aggregator.

What are the benefits of also having a prime brokerage offering?

While many of our OT and PB clients do not overlap, we have found that having a PB offering available can often become a very valuable benefit to the fund manager who is reviewing OT providers. By providing custody and prime brokerage services, the client can gain tremendous amounts of scale from an operational, support, and commercial perspective. 

As PBs have increasing revenue expectations from their clients, the hiring of a separate OT firm can sometimes present an issue for funds who may be looking to separate the two functions. We have the ability to look at the client and deliver a complete solution, if needed. The OT client also opens the door to other firm resources that are typically accessed via the PBs such as capital introductions. Coversely, our PB clients get access to a true OT desk for execution support.

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Redburn Atlantic’s thoughtful approach to the market and experienced trading team mean we have long been recognised as leaders in agency execution. In turn, this has seen us develop into an important trading partner to some of the biggest asset managers globally. Since our integration with Rothschild & Co, we have invested heavily in the US segment of the business, most notably through a merger with Atlantic Equities in 2023. This investment has allowed us to substantially increase our US stock research coverage, as well as enhance our US execution platform via targeted technological enhancements and several important hires.

In doing so, we have created a unique value proposition. The combination of differentiated research (we are one of the few firms on the street who engage in deep dive research), alongside a top tier US high touch trading desk, complemented by an award winning algo suite, has proven extremely valuable to our clients. In our evolution, we have found that customers want the best of both worlds when it comes to execution – access to liquidity alongside market leading client service. By leveraging our deeply experienced team, we have achieved that. 

In the US, we have piloted this by focusing on SMID biotech in both research and trading, and it has paid off in ways that have exceeded our wildest expectations. The number of stocks we have traded has effectively tripled since 2021. In 2024, we nearly doubled US execution revenues year-on-year and have added 70 new accounts for trading, as customers are proactively engaging us to access our research and liquidity. 

What do you expect your biggest drivers of growth to be going forward?

We think that the agency brokerage model is vital to the industry. While larger firms have conflicting priorities, we always focus entirely on improving execution outcomes for our clients. Channeling that energy not only provides a better result to the client in the short term, but also gives us capacity to innovate and drive new ways of trading. For instance, we have launched new tools that incorporate some of the lessons we have gleaned from our European platform regarding liquidity seeking and best practices. Although the two markets are different each with their own idiosyncrasies, there are best practices beneficial to clients. One example is our approach to venues in which we expose pockets of liquidity that we feel are under-utilised by our peers.

Further, expanding the sales and trading team and investing in technology in the US has allowed us to maintain the same premium service and level of innovation while reaching more clients. We have seen an exponential influx of new clients across Europe and the US and expect this trend to continue. As such, this will give us scope to increase our natural block crossing ratio, which currently sits around mid-teens %, above industry norms.

Lastly, alongside the increased flow from our buy-side clients, as the public equity arm of Rothschild & Co., we are also working more with corporates, many of whom have commented on our superior service and execution. This not only allows us to improve the outcomes for the corporates themselves but gives Redburn Atlantic access to more unique liquidity which we can make available to our clients.

How is the trading process changing and what is Redburn Atlantic doing to accommodate this?

The scope and pace of change is challenging. Clients are constantly looking to access more liquidity, while simultaneously reducing costs and avoiding slippage. We are focused on evolving our approach and challenging ourselves to find smart ways to capture liquidity, expand our scope of services, and excel in client support. We are conscious that everyone is under cost pressure, and clients need a well-rounded resource that includes execution quality and service. 

This dynamic presents the challenge as well as the opportunity. On one hand, clients need to automate, which requires an analytical approach and favours the best statistical outcome over a multitude of orders. On the other hand, buy-side traders are facing the challenge of reduced bandwidth but increased expectations of price improvement alpha. Thus, they need to know they can trust Redburn Atlantic as their high touch broker to make thoughtful, intelligent decisions regarding their more difficult orders.

To that end, our algorithmic services team can quickly and efficiently build bespoke algos for those looking to target specific benchmarks, while the high touch team can provide intuition, oversight, and guidance around the more nuanced orders. Finally, our analytics team can offer consultancy for those looking to understand the data in more depth.

Naturally, we are extremely grateful for this award and acknowledgement. Overall, our mission remains to provide firms with the best outcome for their orders. How we achieve that goal continues to evolve and requires the right mix of technology, service, and people. We hope this award shows that we have established an exceptional combination of these three and are best positioned to continue to add value for our clients going forward.

The post Leaders in Trading New York 2024: Redburn Atlantic takes home Agency Broker of the Year appeared first on The TRADE.

Last year was a fantastic year for the FlexTrade team globally, welcoming new clients to the buy- and sell-side FlexTrade client community, including the most recently announced Alecta and Liontrust in EMEA and JonesTrading in North America.

To answer the question, at our core, we are an engineering firm uniquely positioned as a provider of both buy- and sell-side technology, which gives us a holistic view of the entire capital markets trading landscape. We’re privately owned, which has been the case for almost three decades, meaning we are unconflicted by our ownership regarding the course we can set. 

The outcome is close collaboration with clients, partners, brokers, and fintech firms in our broader ecosystem to rapidly deliver trading innovation for our customer base and groundbreaking change for the wider industry.

Could you outline some of the main achievements and milestones from the year?

On the buy-side, we’ve worked extensively to address the current trend around direct-to-buy-side connectivity, where liquidity providers of various types create private, curated price streams for the buy-side, who can then engage at their own discretion. We expect this area to continue growing as we move into 2025. 

On the fixed-income side, we’ve continued adding new features to our EMS, FlexFI. This includes launching a new data lake to allow in-house quant analysis of trading data, continuing our work to build deep venue integrations, and offering our clients, like T. Rowe Price Associates Inc., the choice of third-party integrations they need, such as Propellant Digital. Additionally, several new clients successfully implemented FlexFI in 2024 and are live and in production using the solution.

In the FX space, we’ve made further progress in establishing FlexTrade’s digital asset offering. Notably, we’ve integrated with Coinbase Prime, an institutional prime-broker platform for digital and crypto assets. We’ve also announced a strategic partnership with LSEG’s FXall and new FX integrations for clients, such as Tradefeedr’s pre-trade forecast data via API.

On the sell-side, we undertook an award-winning deployment of FlexOMS to JonesTrading, which selected the solution as its full-service technology platform for its equities, electronic trading, and outsourced trading desk business lines.

Additionally, we continued to see the rapid growth of our integrated order and execution management system, FlexONE OEMS, which has been selected globally by several hedge funds and a raft of high-profile fund launches in EMEA, North America, and APAC.

How do you plan to build on this success?

2025 looks like a packed year for the FlexTrade team globally on both the buy- and sell-side, and from our perspective, it is brimming with opportunity across a few different themes.

In the hedge fund space, firms want to do more with less. Sophisticated workflows are not only for the biggest funds anymore. We see demand for systems with robust compliance, allocation, order marking, strong APIs, and automation capabilities to support various trading strategies, as well as the ability to add new pods or asset classes quickly and seamlessly. Our integrated OEMS, FlexONE, is well positioned to capture this demand.

On the sell-side, desks are reviewing technology and looking to adopt solutions that can scale as their business requirements evolve and provide the optionality to add new asset classes or strategies as the market or their client demand dictates.

As a broader theme, industry consolidation and M&A activity across the buy- and sell-side have seen a flurry of potential acquisitions and mergers in focus, and they’re predicted to continue over the coming year. While the integration strategy of firms coming together can differ case by case, deploying a unified, open-architecture, API-rich trading technology layer over acquired and existing solutions can help to provide a single way to face the market. 

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