HSBC Holdings is reportedly considering outsourcing parts of its fixed-income trading business as it seeks to reduce technology-related costs and keep pace with more agile, tech-driven competitors, according to a Bloomberg report published Monday.
The bank has held preliminary talks with major market makers including Citadel Securities and Jane Street Group about directing some of its trading order flow to external firms. The discussions are still at an early stage, and no agreement has been reached.
While HSBC would retain direct relationships with its clients, the outsourcing would involve functions such as analytics, order execution, and underlying technology. The move could help the bank save millions in IT costs associated with maintaining global trading desks.
The reported talks come amid a broader restructuring under newly appointed CEO Georges Elhedery, who took over in July. Since then, HSBC has cut hundreds of senior roles, reduced dealmaking capacity in Western markets, and reorganised parts of its operations to reduce overhead and sharpen its strategic focus.
Citadel Securities and Jane Street have both been gaining ground in recent years as non-bank liquidity providers increase their share of global trading revenues. According to Boston Consulting Group, non-bank market makers now account for 26% of global markets revenue, up from less than half that six years ago.
Meanwhile, European banks’ share of global trading revenue has dropped by 10 percentage points to 29% over the past eight years.
