HSBC Weighs Outsourcing Some Trading Operations to Lift Returns

Use of market makers would save Europe's largest lender millions of dollars in IT costs

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LONDON - HSBC Holdings is considering outsourcing part of its sprawling trading business as executives struggle to justify making technology investments needed to keep up with larger rivals.

Europe's largest lender has held preliminary discussions about directing parts of its fixed-income trading order flow to an outside market maker, according to people familiar with the matter.

The moves would allow HSBC to save millions of dollars in information technology costs associated with running trading desks around the globe, two of the sources said.

HSBC is open to a deal with firms including Citadel Securities and Jane Street Group, the sources said.

The deliberations within the firm are at an early stage and there is no certainty they will result in a deal, according to the sources.

Spokespeople for HSBC, Citadel Securities and Jane Street declined to comment.

HSBC's willingness to consider such a deal shows that even systemically important banks with huge Wall Street operations are struggling to make the necessary technology investments to properly compete in trading.

Citadel Securities, the market maker founded by billionaire Ken Griffin, has been developing the idea for such a trading service, Bloomberg first reported in July.