Almost half of European brokerage firms plan to consider outsourcing one or more elements of their business within the next six months, according to a survey of more than 40 senior sell-side participants conducted by The TRADE on behalf of Pershing.
Asked to cite the biggest pressures on their business, 71% of respondents mentioned reduced volumes and lower commissions.
Other concerns include the increased burden of regulation, both in terms of higher reporting and surveillance costs and middle- and back-office costs resulting from greater regulatory oversight.
The two parts of the trade lifecycle most likely to be outsourced were ‘clearing and settlement’ and ‘custody and asset servicing’, both mentioned by 73%. Four in ten said they would be willing to consider outsourcing execution.
Scott Coey, head of broker-dealer services EMEA at BNY Mellon – Pershing, said: “The survey confirms the trend we have seen and been responding to in the market for the past couple of years. Most, if not all investment banks and broker-dealers are having the conversation about outsourcing but only a few have taken the leap so far."
The full survey forms part of a report, to be published in January 2014, will explore in detail the future of broking, the pressure on their business and how they are forced to re-evaluate their business models.