When it comes to cross-border equity trading, post-trade operational efficiency is a major pain point for the buy-side. In a joint study involving 45 buy-side entities carried out by analytics firm Coalition Greenwich and the London Stock Exchange Grouo (LSEG), 49 percent of respondents ranked it as one of their top three concerns. Titled “Cross-regional equity trading: Outsourcing for outperformance”, the report found that equity traders dealing in international markets are warming up to outsourcing as a solution.
63 percent of the survey participants indicated a belief that outsourcing could improve execution quality and trade performance when trading across borders, with streamlined workflows, customised strategies, and better access to liquidity cited as key benefits.
53 percent believe that outsourcing is the solution to a lack of familiarity with local markets, with 44 percent of these respondents stating that it could help with gaining local market insights, and another 44 percent stating that it could help with understanding local market structure nuances.
The human element
In a press release, Coalition Greenwich writes that although technology has revolutionised trading across borders, allowing participants to thrive in markets that are increasingly interconnected and complex, “the role of experienced and knowledgeable individuals remains irreplaceable”.
In fact, around-the-clock human presence – made possible by outsourcing – is now more appreciated, given that technology has enabled around-the-clock trading, “Almost everyone understands that success in equity market trading will require a combination of human skill and technology,” says Jesse Forster, senior analyst at Coalition Greenwich Market Structure and Technology.