Firm orders sent directly to the buyside that can be traded electronically. Large asset managers and hedge funds tend to prefer these over traditional IOIs.

Artificial intelligence used in trading for tasks like summarizing information, identifying inefficiencies, or potentially making execution and investment decisions. While promising for efficiency, concerns exist about transparency, control, and potential market impact.

A tool or process used to automate the allocation of orders across different trading algorithms or providers for testing and comparison. Adoption of algo wheels has been slowing. It can be a systematized method of allocating business to specific strategies/brokers based on historical performance.

Investment returns in excess of what would be predicted by a benchmark index. The ability to optimize each trade, going beyond explicit costs and including timing of entries and exits, translates directly into Alpha. Fund managers value traders who can express the Portfolio Manager's nuanced views efficiently and profitably to generate Alpha. Integrated Trade Management aims to enhance trading functions to be accretive to the investment process, potentially resulting in improved performance overall.

The total market value of the financial assets managed by an investment firm. The size of a firm's AUM can influence its trading costs, outsourcing needs, and relationships with brokers. Historically, OT was for smaller AUM firms, but is increasingly used by larger managers.

Outsourcing coverage for the trading desk when internal traders are on vacation, traveling, or during unexpected events. It can also include disaster recovery support. Meraki primarily offers full or supplemental trade management solutions, not standalone backup services, unless integrated into a supplemental role.

Achieving the best possible results for clients when executing trades. This involves considering implicit and explicit costs, timing, amount, algorithms, and channel (electronic low-touch or high-touch). MiFID II requires asset managers to take all sufficient steps to achieve best execution. Best execution is a key factor in broker selection and routing decisions. Outsourced trading models should be structured to focus exclusively on obtaining the best outcome for the client and achieving best execution.

Large, multinational investment banks. They often have larger balance sheets and receive a significant portion of the buyside commission wallet.

A plan to ensure operations can continue during disruptions. Outsourced trading can be an essential part of a firm's BCP.

A trader employed by an investment management firm (the buy side) to execute trades on behalf of portfolio managers and clients. Their role is distinct from sell-side traders and involves managing the "how" and "where" to trade.

Information barriers within a firm designed to prevent the flow of confidential information between different business units, particularly relevant when a firm has both brokerage and outsourced trading operations. Concerns exist regarding the effectiveness of these walls in some firms.

The number of clients assigned to a specific outsourced trader. A low ratio is considered crucial for providing high-touch service, understanding the client's strategy, and responsiveness. Meraki maintains a low client-to-trader ratio (specifically mentioned as 3:1).

The fee charged by a broker for executing a trade, often calculated per share or as a percentage of trade value. Different execution channels (high-touch, low-touch) have different rates. Outsourced trading services may command higher commission rates than traditional sell-side brokerage services.

Agreements that allow funds to use accumulated commissions to pay for research and other services, often involving splitting commissions between executing brokers and research providers. MiFID II and potential unbundling in the US make managing CSA balances across brokers and research providers increasingly important.

The pool of commissions paid to broker counterparties. Funds use accumulated commissions to gain access to services like deal calendars, research, and corporate access. Outsourced trading partners can help managers continue engaging with and compensating the brokers they trust and value, fostering continuity and preserving ties. Funds spent $3.5 billion on broker services in 2024, with $2 billion allocated to investment research, using their commission wallet.

Situations where an outsourced trading provider's interests may not be fully aligned with those of their client. Examples include providers prioritizing their own brokerage relationships, internalizing client flow, or managing orders for multiple clients simultaneously. Meraki's ITM model is explicitly designed to be conflict-free.

The ability for a hedge fund manager to oversee and influence key aspects of their business, from day-to-day operations to portfolio management and trading. Managers value control over these areas. Retaining control to tweak processes is paramount, especially in trading. The perception of losing control is a major hurdle for managers considering outsourcing. Meraki's ITM model is designed to allow managers to retain this coveted control while enhancing functions.

Trading in markets located in different geographical regions, often involving different time zones, regulations, and market structures. Outsourced trading is increasingly used to navigate the challenges of cross-regional trading. Meraki offers 24/6 coverage with regional expertise.

Trading venues that allow matching of buy and sell orders away from public exchanges, often used to trade large blocks of stock with minimized market impact and information leakage. Accessing liquidity in these venues is a key trading competency.

A financial institution that holds a client's securities and other assets in safekeeping to minimize the risk of their theft or loss. Custodian banks also sometimes offer outsourced trading services.

The process of investigation and analysis performed by a potential client on an outsourced trading provider to evaluate their structure, policies, capabilities, and potential risks. Thorough due diligence is crucial to mitigate risks like conflicts of interest and information leakage.

Software used by buyside firms to select and monitor algorithmic trading strategies, with real-time analytics. Bloomberg EMSX was the most popular EMS provider in a 2025 study.

The legal and ethical duty of an asset manager to act in the best interests of their clients. Decisions about outsourcing trading must align with this responsibility. Conflicts of interest can potentially hinder fulfilling this duty.

Financial Information eXchange protocol, a standard electronic communication protocol used for trade execution. It is considered a de facto requirement for trade execution.

Costs that do not change with the level of trading activity, such as salaries, technology subscriptions, and office space for an internal trading desk. Outsourcing can help reduce or eliminate these.

The illegal practice of trading on inside information about a future transaction, often by executing orders ahead of a client's large trade. This is a risk associated with information leakage.

Direct cash payments for services, as opposed to paying through trading commissions (soft dollars or bundled arrangements). MiFID II unbundled research from commissions, leading some firms to pay for research via hard dollars, though US firms are shifting back to bundled arrangements. Asset managers have an aversion to hard-dollar outlays.

Trading executed via broker cash equity sales desks, often involving more complex or sensitive orders requiring direct communication and tailored handling by a sales trader. Buyside traders often value high-touch coverage. Hedge funds directed more flow to high-touch desks in 2024.

Messages sent by brokers indicating interest in trading a security. Traditional IOIs are non-binding and are the first step in a negotiation with a sales desk. Outsourced trading firms typically receive IOIs from their network of sell-side brokers rather than sending them.

Accepting services from a provider that are not directly related to trade execution, potentially creating a conflict of interest if accepted for free.

The risk that information about a fund's trading intentions or positions becomes known to other market participants, potentially leading to adverse price movements. This is a significant concern, especially when trading large blocks or using brokers with potential conflicts. Outsourced trading firms are structured to minimize information leakage, but the concern persists, especially with firms that also have brokerage arms.

A model of outsourced trading practiced by Meraki Global Advisors. It most closely resembles having your own robust internal trading desk. ITM is described as a seamless extension of the hedge fund's own in-house team, fully integrated into the fund's team and workflow. This high-touch approach aims to provide a level of control not present in classical OT models. It embeds a dedicated, high-touch partner into the fund manager's day-to-day operations and is structured to be conflict-free, transparent, and client-centric. ITM traders are in regular contact with the investment team, understand their philosophy and strategy, and communicate their own insights.

Investors in a hedge fund. Hedge funds must appear institutionalized and sophisticated to LPs.

The ability to easily buy or sell an asset without significantly impacting its price. Access to liquidity is a key factor in broker selection and trading partner value proposition. Outsourced trading firms can help access fragmented liquidity and leverage extensive broker networks and liquidity venues.

Trading executed through automated channels like trading algorithms or Direct Market Access (DMA). This channel is leveraged more extensively by larger asset managers.

Real-time information, explanations, and interpretations of market themes and dynamics, often provided by traders and brokers. It is considered valuable for understanding how a market reacts to trading. Outsourced desks, particularly those with local presence and deep relationships, can provide valuable market color.

The effect that a trade has on the price of an asset, often higher for larger trades or in less liquid markets. Minimizing market impact is a goal of execution strategies and a service offered by outsourced trading providers.

The rules, systems, and venues governing trading. Understanding market structure nuances is vital for cross-regional trading.

Markets in Financial Instruments Directive II, European legislation that imposed significant changes on markets, including increasing reporting, accountability, and the unbundling of research costs from trading commissions. Compliance with MiFID II's best execution requirements is critical for European firms and those competing globally.

Brokerages owned by minority individuals or women. Some asset owners require fund managers to trade with these firms as part of ESG mandates.

The ability to trade across various asset classes beyond core equities, such as fixed income, currencies (FX), futures, options, and derivatives. Outsourced trading providers with multi-asset capability can assist firms looking to expand their trading universe. Meraki offers expertise across asset classes.

Outsourcing trading coverage for markets operating outside the firm's core domestic hours, such as Asia or Europe for a US-based firm. This is a popular segment to outsource due to difficulty in staffing and potential turnover.

Streamlining processes and reducing administrative burdens in trading operations. Outsourcing is often sought to improve operational efficiency. Post-trade workflow functions like mid/back-office and settlement are key areas for efficiency.

Software used by buyside firms to manage and route orders. Charles River was the most frequently used OMS provider in a 2025 study.

When an external trading desk assists in some or all trading functions for a hedge fund. For some managers, it can replace most or even all functions of an internal buy-side trading desk. OT firms provide access to expert personnel and integrated technology and infrastructure. The offering can often be tailored to a hedge fund's specific needs. While managers may initially fear losing control, outsourced trading done the right way can enhance core alpha-generative functions. Historically, demand for OT came from start-up hedge funds and smaller managers, but recently, larger firms are also investigating it for cost management strategies. It has evolved from a niche offering to a transformative solution, helping firms access specialized talent, navigate illiquid markets and new geographies, and convert fixed costs into scalable variable expenses.

The person at an investment firm responsible for deciding "what" securities to buy and sell and how to size them (the investment strategy). They work closely with traders to implement their views. The relationship between the PM and the trader is considered paramount.

Evaluation of execution results and costs after a trade is completed.

Assessment of trading conditions and development of trading strategies (broker and tactic selection) before executing an order.

A financial institution that provides bundled services to hedge funds, including clearing, custody, financing, and securities lending. Prime brokers are also providers of outsourced trading services.

A type of low-touch trading involving the execution of a basket of securities. It looked like it was gaining momentum in 2022 but saw less flow routed through this channel in 2024.

A service model of outsourced trading where providers act solely as the authorized traders for asset management clients. This structure allows the outsourced desk to be a truly independent, conflict-free extension of the client's investment team, operating in a pure buy-side capacity. In contrast to other models, the provider does not have a clearing arrangement, conduct traditional brokerage activities, or have competing lines of business with clients' broker-dealers. Clients settle trades directly with their sell-side counterparty, ensuring trades are booked into the fund's account and commissions are paid directly from the fund. Meraki has pioneered this model.

Adherence to rules and regulations governing financial markets and trading activities. Examples include MiFID II in Europe and SEC rules like Reg M and Rule 606 in the US. Outsourced trading providers can assist clients with regulatory reporting and compliance.

Accounts used under MiFID II to pay for research using a pre-agreed budget, separate from trading commissions.

The ability of an outsourced trading provider to handle increasing trading volumes, complexity, or client mandates. Outsourcing allows managers to access scalable trading expertise. The ability to handle significant volume spikes, like during the Covid-19 pandemic, is a test of scalability.

A US Securities and Exchange Commission rule requiring brokers to disclose information about their order routing practices. Examining a provider's Rule 606 reports can reveal how non-directed orders are handled and identify potential financial incentives.

A trader employed by a brokerage firm or investment bank (the sell side) who executes trades for buy-side clients or the firm's own account.

Electronic trading channels provided by market makers that accept immediate or cancel (IOC) orders, allowing buyside traders to execute directly with liquidity providers. Use of SDPs is increasing, and traders expect to use them more in the future. Citadel Securities was the most widely used SDP provider in a 2025 study.

Senior Managers and Certification Regime, a UK regulatory framework holding senior managers and certified persons accountable for their actions.

Arrangements where research or other services are paid for through trading commissions, separate from the execution cost.

The portfolio of securities available for lending, often managed by a specialized function within or outsourced by an investment firm. Meraki offers management of this function.

A schedule of upcoming IPOs or secondary offerings, access to which may be gained through commission payments to brokers.

A market standard where securities transactions settle one day after the trade date. The move from T+2 to T+1 passed uneventfully, but it has implications for trading operations, particularly FX execution in different time zones.

The process of hiring, training, and retaining skilled traders. This is a significant challenge for buyside firms, especially for cross-regional or non-core hours coverage. Outsourced trading can provide access to skilled talent and address this challenge. Meraki emphasizes hiring experienced traders with buy-side backgrounds.

Automated tools used for trade execution, particularly in fragmented markets. They can help navigate complexity and speed. Different types of algorithms optimize for different objectives, like minimizing market impact (VWAP, TWAP, POV) or seeking liquidity. Goldman Sachs and Jefferies were leading algo providers in 2024. Hedge funds concentrate their algo flow more than long-only managers.

Analysis of the explicit and implicit costs incurred during trade execution. TCA tools are used for pre-trade analysis (cost estimates) and post-trade analysis (performance measurement). Buyside funds generally prefer to lean on a third party for TCA, or their own internal analysts, rather than the brokers they trade with, due to concerns about bias. Virtu Financial and Bloomberg were leading TCA providers in a 2025 study.

Requirements to disclose the costs and charges of managed portfolios.

Costs that change in proportion to the volume or frequency of trading activity. Outsourced trading allows fund managers to convert fixed trading desk costs into variable costs.

The network of sell-side brokers and trading venues that an outsourced trading firm uses to execute trades. A wide network can provide access to liquidity and market information.

The seamless connection between an outsourced trading provider's systems and processes and the client's internal systems (like OMS, EMS, middle/back office). Deep integration is essential for a smooth and controlled outsourcing relationship. Meraki aims for full integration.