Bank of New York Mellon Corp. (BNY) wants to do money managers’ trading for them with a new outsourcing service aimed at helping buy-side firms cut costs.
The move builds on the trading that BNY Mellon already handles for $1.8 trillion of assets it manages, the firm said in a statement. The bank will target current and prospective clients, primarily those overseeing around $5 billion or more, according to Adam Vos, head of markets and execution services.
“The pressures on the asset management community have not gone away,” Vos said in an interview. “With lower market levels and/or client redemptions in many parts of the industry, the thinking about business models, the thinking about what’s core to their investment process versus not, really feeds into this as well.”
Asset managers have increasingly sought to outsource trading as they grapple with pressure on margins. Execution services, once used mostly by small firms, have grown in popularity among more established firms that have to compete with zero-fee passive funds and navigate strict regulations.
BNY Mellon’s service, which includes “coverage of all major asset classes,” will broaden its existing middle- and back-office outsourcing offerings. Chief Executive Officer Robin Vince said earlier this month that the firm is focusing on cost discipline and “profitable new business growth.” It plans to cut about 1,500 people, or 3% of its workforce, this year as part of its expense-saving effort.