Commerzbank outsources equities trading and research to ODDO BHF

ODDO BHF will be used by Commerzbank across its equity brokerage and equity research divisions following plans to exit the market.

Commerzbank has outsourced its equity research and brokerage divisions to Franco-German financial services firm ODDO BHF under its radical restructure plans.

Under terms of the agreement, OBBO BHF will be the sole partner of Commerzbank for its equity brokerage and research, which the investment bank confirmed it would no longer be providing in-house.

In February, Commerzbank said it will shut down its equity sales trading business as part of a major restructure that will include the loss of up to 10,000 jobs by 2024.

Known as Strategy 2024, the ambitious restructure plans by Commerzbank aim to gain cost savings of €1.4 billion by 2024 with the jobs cut and the closure of 30% of its business locations globally.

“We have decided on ODDO BHF as a partner because this financial services group will contribute a high level of expertise in equity sales and trading for markets in Europe and North America,” said Michael Kotzbauer, member of the board of directors and responsible for corporate clients at Commerzbank. 

“This will enable us to create a significantly greater bandwidth for our corporate clients in equity market transactions and we will be able to ensure even better placement for them.” 

Commerzbank said it will remain as the first contact partner for its corporate clients under the terms of the agreement.

The development marks one of the first major sell-side outsourced trading agreements. Outsourced trading has predominantly been used by asset managers and buy-side firms to reduce costs.

According to a report from Northern Trust last year, demand for outsourced trading services from the buy-side has increased significantly recently as many firms looked to alleviate operational pressure brought on by the pandemic.

The white paper highlighted how a ‘fourth wave’ of outsourcing had been instigated by accelerated challenges faced by firms during the pandemic including pressure from competition, fees, regulatory and compliance challenges, technology costs, and shifting product demand.