The outsourced trading world was surprised last week when The TRADE reported that UBS will be exiting the space. As one of the larger players offering outsourced trading solutions — particularly in connection with its prime brokerage relationships — UBS’ withdrawal raises timely questions about the current state and future direction of the model.
Outsourced trading has grown tremendously over the last decade. What was once seen as niche has become an accepted and well-integrated part of the global trading infrastructure – Coalition Greenwich found that from 2018 to 2022, the number of outsourced trading providers surged from fewer than 10 to over 40, and more have entered since. Firms of all shapes and sizes have joined the market — traditional brokers, specialized players, and full-service financial institutions. In a separate report, Coalition Greenwich showed that 10% of global asset managers now leverage outsourced trading in some way, evidence of its widespread appeal.
But with growth comes evolution, and it now seems we may be over the initial crest. The wave of new entrants has slowed, and the space is beginning to settle into a more mature phase.
That makes UBS’s departure all the more interesting. Just last year, TD made a similar move, parting ways with Cowen’s outsourced trading unit shortly after acquiring the firm. Two exits don’t constitute a trend, but they do raise questions. Are some firms finding that outsourced trading doesn’t fit well within their larger business models? Is the integration challenge proving steeper than expected? Or are they simply choosing to focus on core competencies?
We don’t claim to have all the answers—but we do believe this is a natural stage in the lifecycle of a growing industry. As outsourced trading matures, it’s reasonable to expect some recalibration. It’s also possible that this moment will open up new opportunities for clients to re-evaluate their partnerships.
For buy-side firms affected by these shifts, this may be a good time to consider what they truly value in an outsourced trading relationship. In our view, the most effective providers will be those who:
• Offer a dedicated team that understands your unique workflows, goals, and constraints
• Maintain a non-conflicted, compliance-first posture
• Provide multi-asset coverage and access to a broad liquidity network
• Support clients with robust commission management capabilities
• Use transparency, responsiveness, and long-term alignment as their first principles
As the space matures, differentiation may become more important than ever — not just in size or scale, but in philosophy, execution, and relationship quality. While we don’t expect news like UBS’ to cause wholesale upheaval, we do think it’s a useful moment for reflection. If you’d like to talk more about how CAPIS approaches outsourced trading, or what to consider when evaluating a provider, we’re always happy to have a conversation – reach out to us.
