What benefits has Marex’s acquisition and joining a firm of this scale brought to your prime brokerage offering?
If I had to sum it up in a few words, I would say continuity and growth opportunities. Continuity all across the business. The structure of the transaction was such that the transfer of the business accommodated this. We brought along our entire team of roughly 150 located across the US, London, Belfast, and Hong Kong. Everyone coming over, from our perspective, was important for a variety of reasons.
Firstly, the team’s morale was maintained and that filtered through to our clients in the form of a sustained high level of service. It really just felt like we changed the name on our jerseys, but we were the same team on the field and could count on each other to deliver the same product we had previously. That was gratifying.
Secondly, all of our critical service providers were supportive of the transaction and facilitated the transfer of our business to Marex. These include all of our clearing firms and key technology and reporting partners, all of which played important roles in providing continuity in client accounts and activity. It really just felt like we were unplugging from one place, and plugging back in at Marex. We didn’t even have to re-paper client accounts!
Acquisitions naturally involve a period of integration, and in our experience, it could not have been planned and executed in a more thoughtful approach. We’ve begun to explore all of Marex’s capabilities across asset classes and to introduce these to our clients and engaged with our new colleagues to explore our capabilities as potential solutions for their clients. We’re also looking at extending our product offering and entering new geographies, creating even more opportunities for clients.
Marex management has been very supportive of the business, encouraging us to grow the business across the globe. We are incredibly grateful and proud to be part of Team Marex.
If we were to look at the prime brokerage space over the last couple of years, we’ve seen prime brokers leaving the market and larger players offloading clients. How has that impacted the market?
We appear to be coming off of the large wave of this over the past few years that shook loose a lot of business. Much of this got picked up by the bulge bracket banks, but other mid-tier firms like ours benefitted as well. What we’re noticing more recently is the echo effect of that, with the larger PBs shedding smaller revenue clients to preserve balance sheet that they’re making available to the “juicier” pieces of business they absorbed.
What are deemed to be smaller revenue clients at the big banks often are quite desirable at a firm like ours, as we can meet such clients’ needs and their revenues move the needle for us.
We have a long history of committing to clients that are deemed too small by the big brokers, particularly emerging managers who may not know how their new business will evolve – the last thing they want to worry about is whether their prime broker will be there for them if things don’t materialise as quickly as they would like.
We stick by our clients; we know that launching a hedge fund is not an easy lift. Being partners to our clients is our stock in trade.
How do you stand out in the prime brokerage field? You’ve mentioned the importance of consistency, what else would you add to that?
Consistency is certainly an important element, but it really goes deeper. We’ve had a long history of investing in the business, always looking to do better, whether it’s adding new talent to our team, improving our trading and reporting technology solutions, or adding new capabilities.
We have the ability to do this because we don’t have a massive legacy infrastructure that many other firms are burdened with. While relying on leading third-party vendors for portfolio accounting and trade execution systems, we’ve spent a lot of time and effort creating proprietary capabilities with our in-house technology team. Our client reporting portal is a case in point. Developed and maintained internally, it provides our clients with a convenient and comprehensive single point of access for all information about their portfolios.
Many would also agree that we stand out because of the comprehensive solutions we offer clients. While we’re certainly not a bulge bracket bank, the capabilities we’ve developed over the years put us on pretty close footing with them. There’s not a security with a proper identifier in the world that isn’t sanctioned or prohibited by regulators that a client can’t trade, if they wanted to, and clear into their accounts with us.
And perhaps most importantly, we stand out because of our team and the high standards of care they exercise in servicing our clients. Whether it’s on the trading desk, in the back office, new launch consulting, or capital introduction, from the feedback we receive, we believe that the services we offer stack up pretty well in the market, and particularly for those funds not getting the proper attention elsewhere.
What trends do you expect to be most impactful in the next 12 months to two years in both the provider and client space?
This year has brought a bit of a sigh of relief to the hedge fund space because for the first time in many years there’s been an increase in both the number of new launches and the amount of capital dedicated to them.
This is obviously good news for the industry, but it’s important to note that the tide isn’t lifting all ships. There have been more billion-dollar launches, who are earning the opportunity because of their track records and pedigree, and that’s driving a good portion of the headlines. They’re, however, also sucking the oxygen out of the room so to speak, leaving much of the rest of the crowd to operate in what remains a challenging capital raising environment. While we’re seeing new launches, we’re also seeing many being delayed because the capital is taking longer to secure.
This calls for greater engagement with Cap Intro teams, and we’ve made a concerted effort to help those in the new launch phase get a clearer appreciation for the lay of the land and to help them more effectively target their efforts.
Client service will continue to be impactful – and this is something that permeates everything we do.
Our teams that service clients are known to the client by name, with direct phone numbers and email addresses. We make it a point to have consistent and continuous relationships between the individuals on our end and the client. That’s what ultimately makes the client comfortable It’s perhaps a little thing, but –that the personal touch makes a difference. It’s ingrained in everything we do and has served us well over the years.