Northern Trust Whole Office To Accelerate Growth

Shanny Basar

Northern Trust, which provides wealth management, asset servicing, asset management and banking, expects the growth of its Whole Office platform to accelerate further in Europe, Middle East and Africa and to ramp-up in the US.

Penny Biggs, chief strategy officer for asset servicing at Northern Trust, told Markets Media that the Whole Office strategy provides a platform for clients to seamlessly fit together their front, middle and back offices. The platform has an open architecture that supports four areas – clients’ strategy and trading; operations and administration; insight and analysis; and data and digital.

“The architecture allows us to give our clients easy access to hidden gems, our own capabilities, plus firms providing the newest tools and technology so they have flexibility and interoperability,” added Biggs.

Last month Northern Trust announced an alliance with BlackRock as part of this Whole Office strategy of working with other firms.

Biggs said: “The partnership with BlackRock means that we can automatically link into Aladdin’s operating environment for our mutual clients, streamlining asset servicing activities. It becomes quicker to share information and removes the  need for manual intervention.”

Rob Goldstein, BlackRock’s chief operating officer and head of BlackRock Solutions, said in a statement: “The current climate has once again demonstrated the importance of data symmetry and streamlining communication across the investment lifecycle from the asset manager to the asset servicer.”

Northern Trust has formed a team focused on Whole Office to be able to consult with clients and devise the front to back solutions that are right for them.

Biggs said: “The number of enquiries we have received shows that the growth of Whole Office will accelerate further in EMEA and we expect a big ramp-up in the US.”

Outsourced trading

She continued that a differentiator for Northern Trust is that clients can execute a trade and the firm can provide full connectivity so that every element – from front to back –  is automated. “Asset managers and owners can focus on the investment decision and driving alpha,” Biggs added .

Penny Biggs, Northern Trust

In the last 18 months Northern Trust has had an exponential growth in outsourced trading which has escalated due to the current need to trade from home and the focus on resiliency as a result of the Covid-19 pandemic according to Biggs.

“The outsourced trading business, Integrated Trading Solutions, has signed more than 50 clients globally in the last 2.5 years and the size of clients has grown over that period,” she added. “Our clients range from those with c$500m (€443m) in assets under management to some now more than $50bn.”

Consultancy Opimas said in a report last year that outsourced trading was one of the bright spots in capital markets, with fees and trading volumes of providers growing more than 20% annually, a trend that is expected to continue in the coming years.

The study, Selecting a Provider of Outsourced Trading for Asset Managers, identified  trends in outsourced trading over the next two to three years which include a shift towards larger asset managers.

“This will typically occur in a hybrid model, where the asset manager retains trading for certain core asset classes, but outsources trading for specific regions and instruments,” said Opimas. “We have seen several large Asian asset managers start to consider outsourcing their US trading desks, for example.”

In addition, outsourced trading desks will have to widen their asset class coverage and will not be immune to the general fee compression in the fund management industry.

“Finally, we expect to see larger asset managers who continue to operate their own trading desks, seek to supplement their revenues by entering the fray and providing their trading desks on an outsourced basis,” said Opimas.

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