Waters Rankings 2022: Best outsourcing service provider—Northern Trust Integrated Trading Solutions


Northern Trust’s outsourced trading capability, Integrated Trading Solutions (ITS), combines worldwide trading expertise in equities and fixed income across global markets providing coverage from multiple trading locations, access to high-quality liquidity, flexible and customizable FX trading solutions, and a fully integrated middle- and back-office service. ITS helps asset owners and asset managers to meaningfully lower costs, reduce risk, manage regulatory compliance, and enhance transparency and operational efficiency.

“Partnering with Northern Trust to outsource portions of our front- and middle-office operations will provide benefits to both our operations and our clients’ performance reporting. Internally, we gain access to greater flexibility and scalability with our trading operations, as well as the accompanying cost savings. Meanwhile, we can serve our clients better by providing increased transparency into elements like execution, transaction costs, and detailed cost analysis.” 
Fabian Gomez, president, Westwood Holdings Group

The Solution

Northern Trust’s ITS assumes the cost and complexity of trading-related activities, delivering these back as a service on a variable cost basis, allowing firms to operate in a capital-lite, agile and focused manner. ITS provides straight-through processing (STP) architecture that integrates data flows through front-, middle- and back-office systems, reducing the need for manual intervention and creating operational efficiencies.

Secret Sauce

Today, asset managers are looking to outsource the entire trade lifecycle, including execution, trade matching and settlement, commission management and transaction-cost analysis (TCA), which can all be delivered through the ITS platform. Northern Trust’s trading clients can also benefit from FX services through Complete FX, which automatically executes FX transactions at a time designated by the client.

Recent Milestones

Technology is a key advantage of fully outsourced trading. Northern Trust utilizes FlexTrade OMS to deliver a competitive edge in program trading, in-trade analytics and global trading workflows.

Northern Trust has partnered with Able Noser Solutions to offer third-party TCA to its outsourced trading clients.

The firm has collaborated with cloud-based software solutions provider Commcise to streamline the commission management process.

“This is an exciting time for our capital markets business and Integrated Trading Solutions product supporting 80-plus clients across the globe, from sophisticated asset owners to boutique funds, to hedge funds, through to large global asset managers. The cost and operating model efficiencies achieved through this outsourced trading capability are recognized by our clients and we expect this solution to continue to grow strongly through 2022 and beyond.” 
Guy Gibson, global head of capital markets, Northern Trust 

Future Objectives

Northern Trust has partnered with Essentia Analytics to make additional analytics available to its ITS clients. Clients using Essentia’s service can sift out any hidden biases or tendencies when they route orders based on what-if scenario analysis and other behavioral analytics techniques.

Additionally, Northern Trust continues to see interest in outsourcing parts of the investment process, as evidenced by its strategic investment in Equity Data Science, a customizable research and idea-generation platform designed for fundamental investors.

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