State Street Corporation (STT.US) and other institutions are expanding globally to seize the new opportunities in outsourced transactions.

As financial services companies continue to expand their global business layouts to compete for larger market share, a number of financial institutions, Inc. including State Street Corporation (STT.US) and Marex Group (MRX.US) are actively expanding their outsourced trading business. Executives at State Street Corporation revealed that the Boston-based institution is planning to establish a trading desk in Frankfurt, further strengthening its business layout in the London area, and also planning to expand its business in the Middle East. Marex, listed on Nasdaq, has recently added several sales and fund referral personnel in Singapore and plans to hire two traders in Hong Kong, in response to the growing business demand. Insiders also revealed that Jefferies Financial Group Inc. (JEF.US) is preparing to launch fixed income outsourced trading services in the coming weeks after a recruitment boom. Jefferies Financial Group Inc. has not yet responded to the matter. Behind this series of expansions is a quiet revolution happening on Wall Street: Financial Institutions, Inc. are seeking more trading execution platforms to reduce trading costs. Outsourced trading desks not only help asset management companies and hedge funds efficiently complete transactions during peak trading periods, but also provide them with trading channels for specific asset classes or regions that were previously difficult to cover. Additionally, more and more asset management firms are even considering replacing their internal trading departments with outsourced teams. "The outsourced trading business is on the rise," said Massimo Labella, Co-Head of International Broking and Outsourced Trading at Marex Group, based in London. "Structural cost pressures, stricter regulatory scrutiny, and tightening macroeconomic conditions have made efficient multi-asset category trading execution services more valuable." It is understood that the company's demand for fixed income outsourcing has surged in the past year. More institutional investors are also opting for outsourced trading service providers. A survey conducted by State Street Corporation in 2024 of 300 asset management firms showed that nearly three-quarters of respondents wanted to complete foreign exchange transactions through outsourcing services, and 67% of institutions planned to have derivative trades executed by outsourced platforms. Jon Naga, Senior Managing Director at Williams Trading, believes that Europe and Asia are becoming core growth opportunities for outsourced trading business. "As the market drives portfolios to shift from the US market to global diversified allocation, investor interest in European stocks and credit strategies continues to rise; at the same time, driven by developments in the field of artificial intelligence, many Asian tech stocks have performed strongly, leading to more trading demand," he explained. Currently, State Street Corporation has about 30 outsourced traders globally, serving large multi-strategy hedge funds and small start-up asset management companies. In the Frankfurt market, State Street Corporation has recruited Dirk Heim and Nicole Lindermayr from UBS Group AG's execution center, and transferred Daniel Eichhorn from Lisbon to Germany as well. It is worth noting that UBS Group AG closed its outsourced trading department earlier this year. In London, State Street Corporation has hired Matthew Hodges from Western Asset Management. Large hedge funds are important sources of clients for State Street Corporation's global outsourced trading business these institutions often choose to isolate new strategies from existing workflows due to high costs and opt to keep them separate from their internal trading departments. "Anyone can set up a trading desk, all you need is market connectivity, trading permissions, and hiring a few experienced traders, the barriers are not high," said Kevin O'Connor, Global Head of Sales Solutions at State Street Corporation. "But when it comes to trading in international markets, the real value lies in integrating all these elements like trading, forex hedging, forex settlement, alpha strategies, middle office services, and liquidity access to ultimately achieve better trading results." Currently, State Street Corporation is looking towards expanding its business layout and diversifying its client base in the Middle East market. "The region is experiencing significant wealth creation, and our current business layout is just the tip of the iceberg," said Dan Morgan, Head of Sales and Trading for the Americas at State Street Corporation.