Jefferies Winds Down Outsourced Fixed-Income Trading Desk
Key Takeaways
- •Jefferies Financial Group is shutting down its outsourced fixed-income trading desk, undoing an expansion that was still being staffed through hiring as recently as a year ago.
- •The unit's wind-down coincides with the exit of Joram Siegel, who headed the desk after arriving at Jefferies in early 2024 from a comparable role at Marex.
- •The desk had been built to supply fixed-income execution services to asset managers that lacked the resources to run fully staffed internal trading operations.
- •Outsourced trading adoption keeps growing in equities, with a Crisil Coalition Greenwich survey showing at least 15% of buy-side equity traders now supplement their desks with third-party providers, up from 10% two years ago.
- •Fixed income has proven harder to penetrate for outsourced trading because of its fragmented liquidity and dealer-driven market structure, even as more than 30 firms, including BNY Mellon and Tourmaline Partners, compete in the broader outsourced trading sector.
Jefferies Financial Group is winding down its outsourced fixed-income trading desk, reversing an expansion effort that was still under way as recently as last year, Bloomberg reported, citing people familiar with the matter.
The retreat coincides with the departure of Joram Siegel, who led Jefferies’ outsourced fixed-income trading unit. According to his LinkedIn profile, Siegel joined Jefferies in early 2024 after running a comparable operation at Marex.
The desk was established to provide fixed-income execution services to asset managers that do not have the resources to maintain fully staffed, in-house trading operations. Bloomberg reported that Jefferies was hiring traders to expand the unit only a year ago, making the decision to unwind the business a notable reversal.
The move underscores the challenges of extending the outsourced trading model beyond its traditional base in equities. Adoption has continued to increase on the equity side. A survey by Crisil Coalition Greenwich found that at least 15% of buy-side equity traders now use third-party providers to supplement their trading desks, compared with 10% two years earlier.
Crisil Coalition counts more than 30 firms competing in the outsourced trading sector. The participants include diversified providers such as BNY Mellon and specialists such as Tourmaline Partners.
Fixed income has been more difficult to penetrate because of its fragmented liquidity and dealer-driven structure, which differ from the equity market. Jefferies’ decision to exit the business shortly after entering it illustrates the challenges firms face when attempting to expand outsourced trading services beyond stocks, even as demand for these services continues to grow more broadly across the buy side. For asset managers, the episode highlights that the availability and scalability of outsourced execution can vary significantly by asset class.
