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EMEA Equity Manager: Providing the Freedom to Focus
Expanding our relationship with this long-time custody and administration client to include trade execution and trade operations brought both expected and unexpected benefits.
The client is a classic value investment specialist with an investment approach grounded in thoughtful research, concentrated portfolios, and trades that require skill and patience to execute. The manager had historically managed all front and middle office operations with their own team of professionals whose roles blended aspects of analyst, trader and operations specialist.
Northern Trust has served as custodian, depositary, and administrator to their Irish-domiciled funds since 2005, and over that time have built enough trust and mutual understanding that we have jointly explored a range of ways to expand our relationship.
Like many managers of its size and strategy, the client was not trading with the frequency or volume to justify employing a full-time trader, and the skill and expertise required to effectively manage their trades meant that traditional middle office outsourcing would be of limited benefit.
At the same time, regulatory requirements around compliance were placing additional responsibilities on Senior Managers. These and other factors left our client in search of solutions that could focus on sustaining consistent and long term best execution outcomes for their clients’ portfolios.
In 2019 we launched Integrated Trading Solutions (ITS) and reached out to the client to explore possibilities. ITS allows clients to outsource trade execution and trade operations (street-side matching, settlement instruction, fail resolution) to Northern Trust, leveraging our scale, technology, global trading expertise, and access to unique pockets of liquidity, among other benefits. ITS would allow the client to outsource execution and trade operations functions to a firm they trust.
As part of the discussion, we mapped out the entire order and execution process – old vs. new – to ensure that all the necessary functions important to their existing process were either appropriately covered or could be safely eliminated. Importantly, by consolidating multiple existing broker relationships with Northern Trust as a single point of contact, we were able to meaningfully simplify their practices.
ITS went live in early 2020, and the client immediately started to see benefits. Consolidating multiple broker relationships and outsourcing trade operations to Northern Trust simplified their operations and reduced the number of due diligence activities required over third-party relationships.
The timing of the change turned out to be ideal: shortly following implementation, the client – like the whole world – was confronted with the COVID-19 pandemic and the challenge of remote work. It provided their teams with much-needed bandwidth and patience to navigate the market volatility that came with the early phases of the pandemic.
Today, Northern Trust and the client enjoy a strengthened relationship that adds value across their whole office – front, middle, and back.
“Our initial goal was to benefit clients through better long-term trade execution. While that remains the most important factor, the value added by Northern Trust’s resiliency, global scale, and expertise have been of significant benefit to us.”
– Chief Operating Officer, EMEA Equity Client
July 7, 2023
The investment industry is at an inflection point, so much so that asset management chief executives have called time on a ‘golden decade’ for their sector.* In this paper, we share key insights from our annual Integrated Trading Solutions Summit.
June 27, 2023
During the Spring of 2023 Northern Trust, in partnership with Greenwich Associates, surveyed 150 global asset managers about their challenges and opportunities within traditional, long only asset management. The survey focused on how the design of an operating model can support strategic growth priorities, as well as the importance of an outsourcing strategy for their future.
June 6, 2023
Systemic shifts are occurring in asset allocation and performance decision-making, as well as in securities finance, trading and liquidity. Learn more about how asset owners and asset managers are navigating the challenges ahead.
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Northern Trust Capital Markets is comprised of a number of Northern Trust entities that provide trading and execution services on behalf of institutional clients, including foreign exchange, institutional brokerage, securities finance and transition management services. Foreign exchange, securities finance and transition management services are provided by The Northern Trust Company (TNTC) globally, and Northern Trust Global Services SE (NTGS SE) in the European Economic Area (EEA). Institutional Brokerage services including ITS are provided by NTGS SE in the EEA, Northern Trust Securities LLP (NTS LLP) in the rest of EMEA, Northern Trust Securities Australia Pty Ltd (NTSA) in APAC and Northern Trust Securities, Inc. (NTSI) in the United States. For legal and regulatory information about our offices and legal entities, visit northerntrust.com/disclosures.
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