What the BNP Paribas Outsourced Trading Closure Means for Asset Managers and Hedge Funds

September 3^rd by Benjamin Arnold

Following UBS’s exit earlier this year, BNP Paribas has now shuttered its outsourced trading business for external clients. This latest development reinforces a critical lesson for asset managers and hedge funds: when outsourced trading is just a small cog in a giant banking machine, your needs can become secondary. For a global bank like BNP Paribas, the outsourced trading desk was never a primary revenue driver, making it a prime candidate for closure when priorities shift.

Should Hedge Funds Abandon Outsourced Trading?

With two major banks exiting the space in a single year, it’s understandable for investment managers to question the viability of the outsourced trading model. Some may even consider the expensive and time-consuming process of building (or rebuilding) an in-house trading desk.

Abandoning the outsourced model altogether would be a mistake. The strategic benefits of a well-executed outsourced trading partnership can be transformational to an asset manager and are too meaningful to ignore. Of course, the devil is in the details, and OT must be done right. We have found that the key to success in OT is avoiding the pitfalls of non-core OT services offered by large banks with giant asset management divisions and instead partner with a firm that understands OT is a different service than the typical institutional client offerings. UBS and BNP Paribas are two of the most recent examples.

A winning strategy in OT involves finding a partner who values you because their business is based on serving you. Here are some crucial factors to consider for ensuring a stable and successful outsourced trading relationship:

The Dangers of a “Side Business”

For the largest, diversified financial institutions, outsourced trading is often an ancillary service, a small part of a much larger securities services offering. This creates several inherent risks for hedge fund clients:

1. Lack of Focus: When a business line isn’t a core revenue driver and doesn’t have the top leadership behind it, it’s less likely to receive the investment, attention, and resources it needs to thrive. This can lead to subpar results and a loss of trust due to poor communication.
2. Hidden Costs and Conflicts of Interest: “Bundled” services can often come with hidden costs and conflicts of interest. Order flow might be used to offset “free” services, and clients may not always receive best execution.
3. Sudden Changes in Strategy: As we’ve seen with both UBS and BNP Paribas, large banks can and do change their strategic priorities. When this happens, non-core business lines are often the first to be cut, leaving clients with little notice, scrambling to find a new provider.

At Meraki Global Advisors, outsourced trading is our only business and buy-side is the only focus. We are not a small part of a larger organization, but a seasoned team of dedicated specialists who are 100% focused on providing our clients with the best possible trading outcomes. Every trade, every client, and every relationship matters because our success is directly tied to yours.

The Meraki Difference: A True Partnership

Here’s how our dedicated, client-centric model differs from the “side business” approach of the big banks:

•We Pay Attention to You: With a 3:1 client-to-trader ratio, we provide the focused, high-touch service that larger firms simply can’t. Our priorities are always aligned with yours.

•Integrated Trade Management: We become a true extension of your investment team, taking the time to understand your strategy and portfolio management style.

•Unmatched Control: You maintain direct relationships with your executing brokers and prime brokers, preserving your valuable relationships and control over your business.

•Cost Efficiency: We transform your trading desk into a scalable, variable cost center that is aligned with your performance.

•Tailored Solutions: We integrate directly into your workflow, operating as a true partner, not just a service provider. Taking trading off your hands, we let you focus on the true driver of Alpha – your research.

•Conflict-Free Model: We have no brokerage accounts, no clearing agents, and no hidden agendas. Our model is the most aligned in every aspect.

•Global Expertise: Our experienced team provides access to global markets and asset classes, ensuring you have the reach you need to execute your strategy.

If you’ve been impacted by the BNP Paribas announcement, or if you’re simply looking for a more dedicated and reliable outsourced trading partner, we’re here to help. We’re confident in our model and proud of the results we have achieved for our clients.

Interested in learning more? Read our latest whitepaper on retaining full control with outsourced trading.

Meraki Global Advisors LLC is a FINRA-registered broker-dealer and member of SIPC headquartered in Park City, UT. The content provided herein is not an offer, solicitation, or recommendation of any securities. Meraki and its representatives make no investment recommendations whatsoever. Past performance is not an indication of future results. This document may not be duplicated or copied, is protected by copyright law, and may contain privileged or confidential information. Information contained herein does not constitute tax, legal, or other professional advice. Content is for informational and educational purposes only. All rights reserved 2025.