UBS Shutters Unit Meant to Help Overwhelmed Hedge Fund Traders

(Bloomberg) — UBS Group AG is shuttering its outsourced trading desk, which had grown to become one of the biggest such offerings on Wall Street in recent years. 

The company began informing clients of the decision and gave them three months to find a new provider, according to people familiar with the matter. UBS is not closing its execution hub as part of the move, one of the people said, asking not to be identified discussing non-public information. 

“We continue to focus on growth and remain dedicated to our clients as we service them through our broad and leading global markets offerings,” a UBS spokesperson said in a statement. 

Outsourced trading desks cater to asset managers and hedge funds and can act as a backup when clients’ staff are out of pocket or provide extra help during busy periods. They can even replace an investor’s trading desk entirely, handling all its orders. Money managers have increasingly turned to outsourced trading desks as the global shift to passive investing has put pressure on their margins. 

UBS’ move was previously reported by The Trade, which said the Swiss banking giant has around 100 clients and is one of the largest outsourcing firms based on that metric. About half of the clients in The Trade’s recent Outsourced Trading Survey reported that UBS’s service in the business was excellent, the publication reported.

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