According to sources familiar with the matter, the pair have communicated to clients that they have jointly concluded it would be in the best interests of clients if the prime brokerage and outsourced trading business were divested to a partner more “strategically and geographically aligned” to the platform.

TD Bank Group and TD Cowen declined to comment. 

TD Bank Group completed its $1.3 billion Cowen acquisition in March. At the time, the bank said the acquisition would create an integrated North American dealer that would significantly advance its growth strategy in the region through the addition of Cowen’s US equities sales trading, and execution, as well as research capabilities.

Cowen Digital

The news follows an internal memo from TD Cowen earlier this week confirming that it would be shuttering its digital assets unit, Cowen Digital, two years after its launch.

The communication, seen by The TRADE, was signed off by 11 team members, including managing directors Drew Forman, head of Cowen Digital; Eric Rose, head of execution; and Keith Coyne head of product and strategy.

The memo reemphasised the importance of “trusted counterparties who understand the needs of institutional investors” and expresses the unit’s need to operate from “a different home” going forward.

The latest move appears to confirm the broadly recognised challenge of merging bank and brokerage cultures.

The post TD and Cowen’s prime brokerage and outsourced trading unit agree to part ways appeared first on The TRADE.

The bank said the acquisition will create an integrated North American dealer that will significantly advance its growth strategy in the region through the addition of Cowen’s US equities sales trading, and execution, as well as research capabilities.

Originally announced in August last year, the all-cash transaction is valued at $1.3 billion. The combined firms’ pro-forma global revenues are expected to increase by more than a third to around $6.8 billion across advisory, capital markets, equity execution and research.

The pair confirmed on 24 February that they had received the regulatory approvals required under their merger agreement to complete the deal.

Cowen will now be known as TD Cowen. Once the transaction closes Jeffrey Solomon, current chair and chief executive officer of Cowen, will join the senior leadership of TD Securities, reporting to Riaz Ahmed, president and chief executive officer at TD Securities and group head of wholesale banking, TD Bank Group.

The post TD completes $1.3 billion Cowen acquisition to advance US investment banking growth strategy appeared first on The TRADE.

In the wake of last year’s crypto winter and the

In a statement released on 1 February, HM Treasury noted that: “The crypto sector continues to experience high levels of volatility and a number of recent failures have exposed the structural vulnerability of some business models in the sector.” 

A tried-and tested approach 

The government has now laid out plans regulate a broad suite of crypto-asset activities, in a manner consistent with its approach to traditional finance.  

These proposals will place responsibility on crypto trading venues for defining the detailed content requirements for admission and disclosure documents – ensuring crypto exchanges have fair and robust standards. 

The government is also seekings to introduce new rules around financial intermediaries with regards to facilitating transactions, and custodians around the safe storage of customer assets. It hopes to create a “world-first regime” to strengthen the regulation of crypto-lending: a practice that contributed significantly not only to the downfall of FTX, but to the subsequent domino collapse of numerous other players in the crypto space that were tied into FTX and its sister company Alameda through a complex network of unsecured and often undeclared loans.  

Read More – FTX fallout: The contagion continues… 

The UK consultation will also seek views on improving market integrity and consumer protection, with plans to create a targeted crypto market abuse regime. 

Global fragmentation 

The move has been a long time coming. Regulation in the global crypto space is highly fragmented, with many leading finance markets (such as the UK, Europe and the US) still lagging behind when it comes to introducing and enforcing a coherent regulatory framework for digital assets. Others, such as Switzerland, the UAE, Singapore, Hong Kong and Japan have been more proactive on a regulatory level, while off-shore centres such as the Cayman Islands, Bermuda and Gibraltar have also attracted business by creating their own legal frameworks – meaning that much activity has been siphoned away from mainstream markets. 

The US, although it has made some progress (for example, with the release in March 2022 of its Executive Order outlining a government-wide approach to digital assets risk and regulation), has suffered from a fragmented approach, with its dual state and federal banking system often moving at different speeds, while Congress has been slow to make any final decisions and a comprehensive regulatory framework still looks to be some way off. 

Europe has got somewhat further – both France and Germany already have regulatory crypto frameworks in place, while the European Commission is currently in the advanced stages of finalising the EU-wide Markets in Crypto-Assets Regulation (MicA), originally proposed in 2020. The first cross-jurisdictional regulatory and supervisory framework for crypto-assets, MiCA is expected to come into force by 2024 and aims to ensure legal clarity, consumer and investor protection, market integrity and financial stability with a consistent approach across all member states.  

UK progress 

The UK’s previous approach to crypto regulation has been cautious – activity is currently not regulated by the Financial Conduct Authority (FCA), although providers can apply to register under its anti-money laundering and counter-terrorist financing regimes. The FCA has been highly reticent in approving applications, however – according to minutes from the a Treasury Committee meeting on 26 January, 85% of crypto firms applying for digital registration failed to meet the minimum standards. 

“We are in the middle of an inquiry into crypto regulation and these statistics have not disabused us of the impression that parts of this industry are a ‘Wild West’,” said Harriett Baldwin MP and chair of the Treasury Committee.  

Some market participants have complained that this heavy-handed approach has stifled innovation, although the FCA has hit back, pointing out that the majority of submissions are of poor quality, with only 5% progressing on the first attempt at 73% being withdrawn or failed – the most significant number ever seen when addressing a new remit.  

Some way to go 

Looking ahead, the latest proposals would seem to have been received as broadly positive. 

“We welcome the Treasury and FCA’s commitment to providing regulatory clarity for the digital asset space in the UK… It should help institutions gravitate towards the UK,” said Taylor Cable, managing director of Cowen Digital Europe, speaking to The TRADE.  

“It’s far and away the right move to approach it in a similar way to tradfi – the market has been begging for clarity.”  

However, those at the coalface are still cautious, and few are yet ready to put their money where their mouths are. According to the latest JP Morgan e-trading survey, released today, almost three quarters (72%) of traders surveyed have “no plans” to trade crypto, while just 15% expect to trade any digital assets within the next five years.  

Read More – Traders predict UK markets to have the worst inflation outlook for 2023, finds JP Morgan survey

The post UK government outlines plans for ‘tradfi’ crypto regulation appeared first on The TRADE.

How is the systematic internaliser landscape developing in Europe and the UK?

The electronic liquidity provider systematic internaliser (ELP SI) business is now dominated by a handful of larger players, making it increasingly important to understand when best to interact with this flow to optimise outcomes based on parent order intent and client strategy. Liquidity providers have become more adept at mitigating post-trade impact but only for a limited time period, after which information leakage may outweigh the impact of executing that business on a lit order book. Bank SIs provide further optionality and potentially more benign opportunities if you know what type of flow you’re interacting with.

In total, today SIs account for around 10% of business, significantly lower than the previous high of 15%. I don’t see a direct correlation between dark and SI business per se but clearly the introduction of the double volume caps in dark and the ban on broker crossing networks post Mifid II encouraged alternative ways of doing business including the introduction of periodic auctions and the increasing use of ELP SIs, which we continue to see as overall positive for the market.

Which market structure areas do you expect to come back into the scope of regulators on either side of the channel in the future?

As we know, in Europe focus has been on further restricting dark trading and systematic internaliser business, whilst in the UK the opposite approach has been taken. Of late there has been very little focus on frequent batched or periodic auctions. In part perhaps because they only account for a couple of percentage points of total business. But anecdotally we expect this to grow, which may encourage further regulatory scrutiny – keeping in mind the European regulator has previously flagged concerns over the nature of this business. In the UK, the new Chancellor made reference to regulatory reforms of the financial markets in last week’s mini budget, which could impact here but beyond the current sway of changes underway I’m not sure what else this could lead to but a watching brief, nonetheless.

Which proposed regulatory changes in the UK and Europe do you expect to impact the buy-side most heavily, why?

Regulatory divergence and market dislocation post-Brexit does little to support a buoyant secondary market, especially at a time when we need to support economic growth and encourage international investment. Without those inflows it makes it very challenging for the buy-side. And whilst of late we’ve heard more positive noises from Europe which could encourage more convergence with the UK rather than divergence, should we see any restrictions on dark trading below Large-in-Scale (LiS) or systematic Internaliser business as currently proposed by the EU Commission and Parliament, we fully anticipate implicit costs of executing that business to increase. And if the cost of doing business in Europe does increase, we could see trading in European shares migrating back to London. If that happens, under the European share trading obligation (STO), European investors wouldn’t be able to access that liquidity in London as the UK has still not been given trading equivalence.

Which market structure areas have been missed by regulators and how can these be addressed?

Recent regulatory oversight both in the UK and in Europe has been fairly all-encompassing, with a number of consultation papers still in play. However, the continued reliance on a primary reference price under the definition of the “most relevant market”, for alternative dark books using the reference price waiver encourages latency arbitrage and interrupts trading when the primary market is down and is therefore something that should be looked at. Obviously the introduction of a pre-trade consolidated tape could go a long way to alleviate these issues, but whilst high on the regulatory agenda I think unfortunately it seems we’re still a way off getting something over the line that we can all agree to. Separately, I think the impact of the US moving to T+1 settlement also needs to be considered by European and UK regulators, and if this is something that could be considered here. Otherwise, specifically in the UK the relaxation of rules around SI and dark business still needs to play out, the potential impact of which may lead to future and yet unknown regulatory intervention.

The post Fireside Friday… with Cowen’s James Baugh appeared first on The TRADE.

The acquisition will see Cowen integrated into the group’s investment banking arm, TD Securities, as a new division called TD Cowen. It will be headed up by Cowen chairman and CEO Jeffrey Solomon, reporting to TD Securities president and CEO (and group head of wholesale banking) Riaz Ahmed. Cowen’s 1,700 employees will bring the combined entity up to a 6,500 headcount, across 40 cities.

“Cowen is a leading independent dealer with a premier US equities business and a strong, diversified investment bank that, when combined with TD Securities, will allow us to accelerate our strategic US growth plans,” said Bharat Masrani, group president and CEO of TD Bank Group.

“Most importantly, the acquisition will provide new capabilities and increased depth in key business lines to meet our clients’ needs and will allow us to leverage our combined expertise, talent, and integrated offerings across a much larger client base.”

The deal is expected to boost the new entity’s combined revenues by more than a third, to an estimated C$6.8 billion, as well as adding advisory, capital markets, equity execution and research capabilities to the TD toolchest. The research element is of particular value – Cowen is currently ranked in the top 10 research platforms in the US.

Expected to close in the first quarter of 2023, the agreement values Cowen at $39 per share and represents 1.7 times current book value as of Q1 2022. It is expected to incur integration costs of $450 million over three years, offset by expected revenue synergies of around $300-350 million. TD sold $1.9 billion-worth of its stake in The Charles Schwab Corporation to fund the transaction, reducing its holding from 13.4% to 12%.

The acquisition fills a gap in TD’s armoury, where it hopes to build out its capital markets business to better compete with RBC. Currently, wholesale banking revenues account for around 11% of TD’s total business, half that of RBC’s wholesale contribution. Cowen could be the ideal catalyst to boost these numbers – formerly a division of Societe Generale, the bank has been on a growth trajectory since its spin-off and public listing in 2006, delivering a 38% profit last year driven by investment banking and brokerage revenues.

“At Cowen our success comes from striving to outperform in all we do by exceeding expectations and providing innovative solutions to, and partnering with, our clients. Taking this step will make us even stronger and more effective in serving their growing needs,” said Solomon. “The strategic decisions and focused investments that we have made over the last few years have positioned Cowen for this exciting next chapter of our growth.”

The acquisition is the latest in a string of deals by TD to expand its operations into the US, driven partly by strict Canadian regulations that limit domestic mergers. Earlier this year, the bank entered into an agreement to buy Tennessee-based First Horizon Bank for $13.4 billion in a bid to break into the top six US retail banks, although doubts have since been raised as to whether the deal will close after US Senator Elizabeth Warren filed objections to the merger in June.

The post TD Bank Group to acquire Cowen in $1.3 billion deal appeared first on The TRADE.

The new solution is tailored specifically to the needs of smaller fund managers with AUM typically less than $100 million.

Enfusion describes the new system as a means for smaller managers with limited recourses, but comprehensive requirements, to access sophisticated pre-trade, execution, and post-trade solutions.

In addition, Enfusion Express will help reduce manual processes, improve real-time, portfolio-level visibility, and streamline connectivity to managers’ execution, fund administration, prime brokerage and other partners.

As the size and complexity of these small funds grow, they can easily upgrade to Enfusion’s platform for enhanced OEMS capabilities, full portfolio management and accounting functions, analytics, and outsourced managed services.

“Enfusion Express addresses the operational needs of smaller funds, both newly launched and existing, that remain an underserved but growing segment of the market. Sell-side firms are recognizing and responding to their unique needs, as evidenced by an uptick in solutions like outsourced trading desks. We see an opportunity to provide best-in-class solutions to these managers as they look to scale their firms while deepening our relationships with our ecosystem partners,” said Thomas Kim, chief executive of Enfusion.

“As we continue our expansion into new market segments, Enfusion Express serves as a natural extension of our strategy. There are numerous countries with a significant concentration of smaller managers, and I see Enfusion Express ultimately accelerating our penetration into these markets.”

Enfusion Express is available through partners such as prime brokers, outsourced trading desks (OTDs), allocators and fund administrators who already serve the small fund manager segment.

Cowen is the first partner to offer its client base the solution and its coordination with Enfusion is designed to deliver an end-to-end solution that is efficient and results in an improved client experience and greater risk reduction.

“This partnership… is a natural fit with our prime brokerage and OTD businesses,” said Mike Rosen, co-head of prime brokerage and outsourced trading at Cowen.

“Our global clients can leverage Enfusion’s market-leading technology with full support from our front-to-back sales, technology, and operations teams.”

Connecticut-based hedge fund manager BroadArch Capital is the first client live on Enfusion Express. The new solution allows for real-time visibility into trade execution conducted by Cowen’s OTD on its behalf, as well as simplified order submission and allocation.

“We have a long history with Cowen as a client of their prime brokerage and outsourced trading desk and welcome this innovative and robust offering,” said Robert Reitzes, managing partner, portfolio manager and chief compliance officer at BroadArch Capital.

“Enfusion Express allows us to create orders quickly and monitor their status via dashboards which show P&L and portfolio exposure. It’s easy to add or unwind positions based on intra-day market events.”

The post Cloud-based OEMS seeks to make life easier for smaller fund managers appeared first on The TRADE.

As part of his role, McGoldrick will act as a consultant to new and emerging hedge funds and guide them through the process of launching and growing an investment management business.

He joins from Cowen, where he served for almost seven years, most recently as director of prime brokerage and outsourced trading.

Prior to that, he was a founding member and head of marketing and business development at boutique prime broker, Alaris Trading Partners.

Concept Capital Markets acquired Alaris after five years of operation and McGoldrick helped lead the transition to Concept’s platform. Cowen Price Services later acquired Concept in September 2015.

Before founding Alaris, McGoldrick served at UBS Securities as associate director in the firm’s prime brokerage division – working alongside hedge funds and offering support related to sales, relationship and capital introductions.

In a social media post announcing his appointment, McGoldrick said: “I’m happy to announce that I’m starting a new position as managing director, co-head of prime brokerage services at Jones Trading. I am excited to join this dynamic company and look forward to sharing my new role with many of you.”

The post Jones Trading appoints new co-head of prime services from Cowen appeared first on The TRADE.

Launched earlier this year, Cowen Digital aims to accommodate the rising demand for digital assets from institutional investors, offering full trade execution and custody services.

The move makes Cowen the first traditional investment bank to provide an institutional digital asset solution through Eze’s institutional OEMS platform.

“Our clients are already accessing 16 of the leading tokens through our high-touch trading desk,” said Eric Rose, head of execution at Cowen Digital. “Adding the Eze OEMS to our robust institutional-grade platform further extends our access to liquidity alongside the most relevant market data and enhances our clients’ ability to connect seamlessly with the digital asset market.”

The institutional digital asset trading platform from SS&C Eze offers improved broker-agnostic access to institutional liquidity throughout the market.

The platform provides market data from more than 35 sources spanning 100+ tokens and 500+ pairs, allowing users to customise order details and obtain buy/sell quotes for selected token pairs.

Clients who have access to Eze’s integrated OEMS capabilities can also generate crypto orders in their order management blotter and send them to Cowen for execution.

“Our digital asset trading network allows our clients and partners to fully integrate their crypto and other digital assets into their investment operations,” said Frank Matarese, senior director of product management at SS&C Eze. “This integration enables the same controls and workflows for the other instruments they trade today and provides access to liquidity on a global scale.”

Earlier this month, specialist fund manager Liontrust extended its relationship with SS&C to help manage the majority of its £38.5 billion in assets under management and advice (AuMa). The move builds on the support that SS&C has provided to Liontrust via its OEMS system since 2016.

The post SS&C provides Cowen Digital’s institutional digital assets platform with OEMS access appeared first on The TRADE.

Named Cowen Digital, the new platform offers institutions access to the digital asset ecosystem using trade execution and custody solutions.

Cowen confirmed that the platform had been trading crypto on behalf of its clients for several months, with plans to add derivatives and futures and decentralised finance (Defi) and NFT access in the future.

Custody solutions on the new platform will be leveraged through a partnership with PolySign’s Standard Custody & Trust – following Cowen’s $25 million investment in PolySign last year.

Users of Cowen Digital will be able to access Cowen’s aggregated liquidity; proprietary algorithms and trade directly from Standard Custody’s cold storage solution.

Drew Forman, who has been managing director and head of equity derivatives at Cowen since 2017, has been appointed as head of the new division, effective immediately.

“In conjunction with our integrated partners Standard Custody and prime brokerage solutions provider, Digital Prime Technologies, Cowen Digital provides our institutional client base with the same dedicated level of thought leadership, product capability, service and professionalism they have come to expect from Cowen,” said Dan Charney, co-president of Cowen.

TP ICAP also moved to launch a similar digital assets spot trading marketplace in June last year as part of an expansion of its existing digital assets business launched in 2019.

The post Cowen launches institutional trading and custody division appeared first on The TRADE.

John Orrock joins Cowen as a managing director in Cowen’s fixed income outsourced trading team, responsible for driving its expansion in Europe and Asia and reporting directly to head of the division, Joram Siegel.

He joins Cowen after most recently serving as head of emerging markets and outsourcing at Aurel Partners – acquired by BGC in 2006 – for nearly three years.

Prior to joining Aurel, Orrock notably spent 17 years as head of trading at fixed income specialist Bluebay Asset Management.

Cowen launched its fixed income outsourced offering at the start of last year, offering buy-side clients access to institutional-grade execution and liquidity access.

“Cowen fixed income outsourced trading is undergoing a period of significant growth, with demand for services in this asset class continuing to rise,” said Siegel.

“He [Orrock] has a wealth of experience and long-standing relationships which we believe will be invaluable in helping us to achieve our ambitious growth plans whilst also continuing to deliver value and exceptional service to clients.”

Last year was littered with new appointments to Cowen’s outsourced trading teams as it looked to expand its services across asset classes, in particular fixed income, including former MUFG credit veteran, Siegel, who was appointed to head up the division shortly after its launch in January.

The institution also later added two credit traders from FHN Financial and Column Park Asset Management in June.

The post Former 17-year Bluebay trading head joins Cowen to expand fixed income outsourced team appeared first on The TRADE.