[ T H O U G H T L E A D E R S H I P | C O W E N ]
MOVING ON UP
Independent investment bank Cowen has traversed the recent market difficulties well , increasing business lines and geographic reach in the last two years . Here , Jack Seibald , managing director and global co-head of prime brokerage and outsourced trading , discusses the market conditions and the firm ’ s upcoming acquisition by TD .
It was recently announced that Cowen will be acquired by TD . Can you tell me a bit about the deal and what it may mean for the business ? TD made it clear in their press release and in the subsequent investor calls that what brought them to Cowen was our entrepreneurial , client-focused and values-based culture and our expertise in key growth areas . The articulated goal is to create incremental opportunities to scale our respective client platforms collectively . The common values we share in appreciating our clients and our colleagues appear to have played a significant role in bringing the two firms together as well . In prime brokerage specifically , we believe becoming part of TD will bring benefits to clients and the teams of both firms as the complimentary capabilities should provide the opportunity to offer a wider range of solutions .
Looking at the prime brokerage landscape , how would you say it has changed since the Archegos fallout ? In the last 24 months , two of the largest European banks , who had been prime brokerage giants , are now essentially out of the business . Some pieces have been absorbed by other banks and I ' m sure you can read as well as we can of the trials and tribulations that those integrations are causing . It ’ s fair to say that the number of large players in the space has certainly shrunk over the last couple of years . It ' s also fair to say that those who have been successful , the bulge bracket US banks , have probably gained from the dysfunction . The big are getting bigger and the strong are getting stronger . The dislocations are creating some opportunities for mid-tier or boutique firms that have the capabilities comparable to the bulge bracket firms , but perhaps have not previously been considered credible alternate providers until fund managers needed to look for one alternative providers and have come to understand and appreciate that the capabilities available are suitable for their needs . We are asserting ourselves in the marketplace in a thoughtful manner and have experienced some success in winning new clients that have been impacted by the industry shakeout .
What have been the key successes at Cowen over the past 12 months ? It ' s really been doing more of the same . We tend not to make massive changes in our business model very frequently , but rather build orderly over time and to a large extent that ' s what we ' ve done over the past year . We did have an opportunity in the preceding year to absorb a significant piece of business in Europe when one of our former competitors decided to exit the market . We were fortunate enough to be able to hire the team and bring over a very significant portion of the client base . As a result , we did experience a step function increase in the size of our business and worked diligently to make sure that we absorbed it appropriately and continued to provide the high level of service that we pride ourselves on . We ' ve also been focused on growing organically , but doing so in a thoughtful manner . Because there ' s been so much displacement in the marketplace over the past 18 months , it could be easy to get caught up in the opportunities and wave every new piece of business in . The reality is that we see the opportunities perhaps a little differently than others , where , because of the dysfunction and the shrinking of the pool of providers , we can be a little bit more thoughtful and deliberate in selecting those clients that are more appropriate matches with our business . Making sure that their needs and our capabilities really line up , that the revenue opportunity from our perspective makes sense , that ' s the way we ' ve been going about it . We also continue to focus on our outsourced trading business , where we ' ve added personnel with fixed income expertise over the past year . That ' s a relatively newer element of our outsourced trading service - one that we think ultimately has the potential to become larger than the equity and options outsourced trading business . If for no other reason , based on the size of the fixed income market , the bespoke nature of how fixed income is transacted , there ' s a lot more touch involved than clicking a button to buy a large number of shares in a liquid stock within a tight price range . There ' s a lot more value that a team like ours can add in the process to portfolio managers when they ' re trying to deploy capital in the fixed income markets . The addition of personnel in that area , some very senior , is meant to extend
18 Global Custodian Fund Services Annual 2022