[ T H O U G H T L E A D E R S H I P | C O W E N ] our capabilities , but also to send a message in the marketplace that we ' re capable of providing this solution , and asking firms to offer us an audience to have a discussion about how we will meet our clients ’ needs . We ' ve also made a concerted effort over the past year to extend the reach of our capital introduction effort internationally . We hired our first team member in Asia , who works out of our Hong Kong office . We already had a senior person in London and we ' ve since hired additional talent there .
So geographic expansion is on the radar for Cowen ? It definitely has been . If you dial the clock back to when Cowen first entered the prime brokerage and outsourced trading business seven years ago , we were purely a domestic solutions provider . A year later , we planted our flag in London and started building a business . Two years later , we laid the groundwork for a launch in Hong Kong and started building that business . Fast forward to today and we have an integrated global footprint . We think , based on everything we see , that the growth opportunity for us over the next three to five years is potentially greater in Europe and Asia – in large part because of the very significant differences we see in the competitive landscape . Unlike the aggressive efforts by mid-tier or boutique prime brokers aimed at emerging fund managers we face in the US , we don ’ t see a similar market structure in Europe or Asia . The market in these regions seem to more defined by the bulge bracket firms and smaller regional players , with many not able to provide the global solutions a firm like Cowen can . Much of that has to do with the broader range of services that we are able to provide to clients in addition to the traditional custody , clearing , financing and execution . Our team is very capable and very willing to do the operational support function , from as little to as much as the client would like . We ' ll do overnight portfolio reconciliation and portfolio reporting for clients . Essentially , providing them with a
Jack Siebald
service that they would otherwise have to internalise and fund on their own . These are the kinds of things that , particularly in the international markets , we ' re finding are attractive solutions , particularly for emerging managers . As time has moved on , we seem to have found our way to more mature and more established fund managers . We take this as a positive development as I seems to validate the credibility and attraction of the solutions we ' re providing to this different client set , thus expanding our market opportunities . It ' s good to know that when the TD deal closes , we ' ll have a much larger balance sheet with good funding costs that can support this anticipated growth .
How have client needs evolved in the wake of Archegos and Covid ? The one overriding theme for us over the last couple of years has been the broadening of the acceptance and adoption of outsourced trading . Historically , it was more the provenance of emerging hedge fund managers .
Part of that might have been driven by Covid . Working from home validated the notion in the minds of many portfolio managers that they didn ' t need everyone in their organisation sitting in their offices to function properly . It also raised the idea that they perhaps could rely on other traders sitting remotely , such as those provided by an outsourced provider . Regardless of the reasoning , it ' s very evident to us that the acceptance of outsourced trading as a solution has broadened out materially to include much larger , well established hedge fund managers , but perhaps even more importantly , even larger and more traditional investment management firms , including investment advisory firms , pension funds , large family offices , and other such firms that have a much broader range of investment activities . The key element that ’ s driven our business is we ' ve not just limited the solution to global equity executions , but rather have developed a comprehensive set of services that encompasses other asset classes including options and other derivatives , fixed income , FX and futures , as well as pre- and post-trade operational support that clients would otherwise have to perform themselves . We ' ve put together a team of traders that now numbers more than 40 , including professionals with long tenures and a broad range of experiences - some 75 % of the team have worked on the buy-side . They ' re coming from firms where they worked alongside and reported directly into portfolio managers and understand the relationship that needs to evolve between a trader and a portfolio manager . Our geographic reach has also played an important role in our growth as we can offer clients full trading and trade support solutions through our offices in the key global time zones with 24 by six access . We have teams operating in the US , as well as in Hong Kong and in London . So as they say , we can pass the book along for clients in a rather seamless manner . That ' s something that ' s not easily replicated inside , without an enormous effort and expenditure . And as we know , all firms don ' t have the resources to do that .
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