Outsourced trading desk Tourmaline gains majority investment

Copley Equity Partners has invested in outsourced trading provider Tourmaline amid growing demand for its services from asset managers.

Independent outsourced trading services provider Tourmaline Partners has confirmed it received a majority investment from private investment firm Copley Equity Partners.

Tourmaline said it would use the investment to pursue new technologies and expand into new geographies and asset classes to meet increasing demand for outsourced trading services. Terms of the majority investment were not disclosed.

“We have followed Tourmaline closely for several years and have been impressed with their long-term vision and global expansion,” said Peter Trovato, managing partner at Copley Equity Partners. “Tourmaline has captured lightning in a bottle, as changes across the trading landscape – from MiFID II-driven unbundling, to liquidity fragmentation and cost pressures – have led the buy side to seek outsourced and supplemental trading solutions to gain efficiencies and improve trading performance.”

Established in 2011, Tourmaline provides more than 300 institutional investor clients, including hedge funds and asset managers, with outsourced trading services and is projected to trade $300 billion notionally in equites throughout this year.

Outsourced trading has surged in popularity with the buy-side in recent years amid increased pressure on margins, the rise of passive investing and regulatory requirements such as MiFID II. While buy-side traders see the trend as a potential threat to their roles, firms that have outsourced execution to a third-party have claimed to see significant cost benefits.

The recent coronavirus pandemic could also accelerate the shift towards outsourced trading, after several large custodian banks told The TRADE that demand for such services has surged amid the global crisis.

“Tourmaline’s unique business model has led to tremendous growth and has made them a recognised leader in outsourced trading. The extensive experience of its traders, and the tremendous amount of time and resources the founders have put into the company, have enabled Tourmaline to provide clients unprecedented help in sourcing liquidity, trading across regions, and achieving best execution and costs savings,” added Trovato.