Outsourced trading (OT) has evolved from a niche offering to emerging managers into a mainstream option for hedge funds, asset managers, and institutional investors of all sizes. The number of outsourced providers has multiplied, but their models, incentives, and level of service vary widely. The details matter and determine the success or failure of an outsourced desk.

For fund managers, selecting the right partner is not just about cost savings. It’s ensuring that the trading function is fully integrated into the existing investment team, fully aligns with the fund’s strategy, helps the fund scale, enables the team to focus on core activities, and at the same time preserves your control over the portfolio. This new guide outlines the critical factors to consider when evaluating outsourced trading partners.

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A summary of the white paper follows.

Why Choosing the Right Partner Matters

Trading may not be the main alpha generation mechanism funds have but it still essential to get right. Studies estimate that inefficient trading desks can reduce performance significantly costing managers billions. At the same time, investors are scrutinizing fees and fixed overheads, putting pressure on funds to optimize costs.

At the same time, global banks that bundle trading with other services have been known to shutter outsourced trading departments without much prior notice.

A poorly chosen outsourced trading partner can introduce conflicts of interest, reduce execution quality, limit global market access, or leave clients scrambling to find a new partner. On the other hand, the right OT partner can transform trading into a competitive advantage, with global coverage and seamless integration with your existing team.

Key Considerations When Selecting an Outsourced Trading Partner

1. Model & Alignment

As you can imagine, not all outsourced trading models are the same. Classical OT providers often operate as introducing brokers, routing trades through their own counterparties. This introduces conflicts and does not guarantee best execution.

In contrast, the Integrated Trade Management (ITM) model, practiced by Meraki, acts as a pure buy-side partner, trading directly through your chosen brokers while integrating fully with your investment team.

2. Client-to-Trader Ratio

High client-to-trader ratios can dilute service quality. If a trader is responsible for dozens of clients, they cannot dedicate the necessary time to learn your strategy, communicate actively, or respond quickly.

Look for partners with a low client-to-trader ratio (e.g., 3:1 or 5:1 maximum). This ensures you get high-touch, personalized service that feels like an extension of your own desk.

3. Global Multi-Asset Coverage

Alpha opportunities are increasingly global and multi-asset. A capable outsourced desk should provide seamless coverage across time zones and asset classes: equities, credit, FX, derivatives, and more.

Ask:

• Do they provide 24/6 coverage across Asia, Europe, and the U.S.?
• Can they manage illiquid credit, derivatives, rates, commodities, or complex hedges?
• Do they have proven experience sourcing liquidity in emerging markets?

4. Technology & Infrastructure

Modern trading requires robust tools: OEMS, real-time TCA, and seamless connectivity with prime brokers and custodians. Some providers cut corners by relying on outdated technology.

An advanced partner will integrate with your existing OMS, provide sophisticated TCA to reduce costs, and deliver real-time reporting to ensure compliance with regulatory best-execution requirements.

5. Conflicts of Interest

Many OT providers are tied to broker-dealer businesses, creating potential conflicts. They may route trades to venues that benefit them, not you. This is not always evident to the client but when in doubt, look at the incentives.

The right partner is conflict-free by design, trading only in your name and through your selected counterparties. This preserves your commission wallet and ensures all relationships remain yours, not theirs.

6. Cost Structure

Internal desks carry heavy fixed costs: salaries, benefits, terminals, compliance, and infrastructure. Outsourced trading should transform those fixed costs into variable expenses, scaling with trading activity rather than dragging on performance.

Questions to Ask Potential Partners

When evaluating an outsourced trading provider, ask:

• How many clients does each trader cover?
• Do you trade through my broker relationships, or your own?
• What technology and tools do you provide?

For more critical questions to ask, read our full white paper.

[DOWNLOAD FULL WHITE PAPER]

The Meraki Difference

At Meraki Global Advisors, we were built specifically to provide sophisticated funds the same level of service as an exceptional in-house desk. Our Integrated Trade Management model means:

• Low client-to-trader ratios (3:1 max)
• Global, multi-asset coverage with senior traders in Asia, Europe, and the U.S.
• Conflict-free structure—we never trade through our own accounts
• Advanced technology & TCA to enhance execution quality
• Variable cost model that preserves management fees and scales with trading activity

Our role as your OT partner is not to replace your brokers or change your process. It is to extend your team, preserve your relationships, and help you scale better.

Done right, outsourced trading enhances alpha, reduces overhead, and provides global reach, all without giving up control.

If you’re evaluating outsourced trading, ask the hard questions and look for a partner that integrates seamlessly with your team.

[DOWNLOAD FULL WHITE PAPER]

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