The move by Marex to acquire Cowen’s Prime Brokerage and Outsourced Trading business represents the next chapter in the story of a financial services provider that has championed innovation and client focus for more than two decades. The deal has also generated questions for a large and diverse group of customers around the world who have come to appreciate the buy-side ethos and commitment to high-quality service that the business is renowned for.
We hear from the two leaders that developed a singular business dedicated to serving fund management clients of all types and sizes. Michael Rosen and Jack Seibald, now the Global Co-Heads of Prime Services and Outsourced Trading at Marex, offer their thoughts about how they see their business evolving and what it means for clients – both in the immediate future and longer term.
Mike and Jack began their journey together in the 1990s, eventually forming a company called Concept Capital. That group was acquired by Cowen in 2015. The principle which Mike and Jack had right at the start – building a service provider that is entirely in sync with the needs of buy-side clients, offering outstanding personalised high-touch service along with top-tier institutional solutions – has not changed. This strategic positioning will remain the guiding force under the Marex brand.
The immediate future: What customers can expect next
Q: Both of you will continue to run these services in the new group. What does that say about this transition?
Jack: Most important, it’s not just Mike and me. There are many people who’ve been part of our business for many years, some as far back as our start. This is not a two-person show by any stretch of the imagination. It’s a team of some 160 dedicated people across eight offices worldwide. All of them have contributed to our growth in their own way, and all of them will be a key part of the transition. This ought to provide our clients with a sense of comfort and continuity.
Mike: This consistency is our top priority. There are many people who have been part of the Cowen brand who will play an important role in ensuring that we continue to deliver that level of service. Jack and I will remain at the helm of the businesses, and we have additionally been appointed to Marex’s Management Executive Committee.
Q: For clients of your prime services and outsourced trading units, what are the immediate impacts of the change? Will they see any difference in their interaction with your team or systems?
Mike: The short answer is no. All clearing counterparties, trading and reporting technologies, and most personnel were part of the transfer, so clients will see no difference in their interaction with our team and systems. They will get the same service they did before, from the same people who have helped them grow their businesses over the years.
Jack: Clients have had a seamless transition and haven’t needed to make any changes at all from their end. All of their account details are the same as before and their trades are being executed on the same systems. They also have the same points of contact as before. We will continue with the same business strategy, servicing the same client segments that have defined our success over the years.
Building on the brand: Staying true to a client-centric set of values
Q: What was the initial vision for prime services and outsourced trading operation? Could you explain the history here?
Jack: Mike and I grew up on the investment side of the business, first as analysts and then as portfolio managers. With this in mind, we’ve always brought the buy-side’s perspective to the services and solutions we offer clients and the manner in which we deliver them.
Mike: Our strategy has always been clear from the outset. A prime broker needs to fully understand the needs of buy-side clients and an outsourced trading provider must look, feel and function like a buy-side organisation – from the technology used, to the people delivering the service. This approach means we’ve developed outsourced trading services that look and feel as if they’re performed by the client’s organisation, along with a high calibre institutional offering.
Q: How will you maintain this idea of being client-centric within the new group? Will you continue to work on tailored solutions for individual clients?
Mike: Joining the Marex group means that there will be more resources available as we work with funds across the spectrum to help them succeed and innovate. We’ll be able to do more to develop solutions, whether that involves trading capabilities, clearing or expansion into new markets.
Jack: We are already known for the depth of our trading capabilities and our global multi-asset class expertise. Joining Marex – a diversified global financial services platform – will only strengthen that aspect of the offering. It allows us to extend our coverage and offer more integrated solutions to our clients across a wider spectrum of asset classes and markets. We share a common vision and goal of catering to the needs of a wide variety of client types on a global basis.
Q: You have seen a substantial increase in the number of clients during the past few years. It would appear that your vision for putting the client at the heart of the business is appreciated and valued. Why do you think that value is so clearly being understood?
Mike: The value is understood because it makes sense. Just as our business was able to flourish under the Cowen banner, we see that continuing under the Marex brand – and for the same reasons.
The most important element is a common set of values and objectives. We shared those with Cowen management when they acquired our business in 2015. As we integrated our business into the firm, all the business lines supported each other and focused on delivering for clients regardless of where in the firm the revenues were generated. Employing that “client first” philosophy works, and we are committed to sustaining this within Marex.
The benefits of joining Marex: A wider vista, a bigger product suite
Q: What can we expect in terms of new directions from the prime services and outsourced trading business? Will there be any significant changes?
Jack: Marex clearly brings the financial wherewithal to support our desire to further extend the reach of our business and a geographic footprint that will facilitate our continued expansion into additional markets. They have more than 30 offices around the globe. They also have a product/asset class suite that will extend our capabilities into areas such as futures, commodities, energy, carbon and weather. We expect that many in the Marex client base could have an appetite for the services we provide as well.
Mike: As part of Marex, we will have a major presence not only in Europe and the Americas, but also a growing footprint in Asia and the Middle East. In addition to the market synergies that Jack mentioned, we see big benefits from the self-clearing capabilities the company will have and from a large technology development team of around 80 people. We also think there is a great opportunity to introduce Marex to a wider spectrum of the investment community. The company is made up of many, many respected brands in a wide variety of market areas, including some niche markets.
Q: The prime services sector has undergone a big shift with major players exiting and others in the top tier adjusting. How will the prime services business move forward?
Mike: The capabilities we developed over the years have put us in a position to be a credible alternative to the larger bank-owned prime brokers. With Marex’s financial strength and self-clearing capacity – and with particular expertise in certain asset classes – our competitive positioning in prime broking will be enhanced.
Jack: It’s also worth noting that throughout this period of turbulence for the prime brokerage industry, we’ve been remarkably consistent in the rankings. When we were part of Cowen, our business was in the top 10 prime brokers for five straight years. It has ranked every year in the Global Custodian Prime Brokerage survey for more than a decade. Few other firms have done this, and certainly no other non-bulge bracket provider has.
Q: People have embraced outsourced trading and come to view it as a new normal. Do you see that trend continuing and will the new ownership help you offer these services in new areas?
Jack: It’s clearly being more widely accepted. We definitely expect this trend will continue. This view is informed by the growing level of inquiry from larger, more traditional investment management enterprises. With the asset class expertise that Marex has, we certainly see the prospect of widening the audience for the service.
Q: How will this new organisation support the brand as you’ve just described it? What signals has Marex senior management sent that suggests they “get” the concept you’ve long promoted?
Jack: We have been servicing clients (albeit from within different institutions) over the past few decades and we know that customers consistently understand what we’re trying to do. So, we’ve built a pretty effective messaging playbook to employ. We believe that with our marketing capabilities, we will not only be able to effectively “relaunch” the business as Marex Prime Services and Marex Outsourced Trading, but in doing so also enhance and broaden the overall Marex brand across a broader audience.
Q: What about prospective clients? Is there anything about the transition they should know about?
Mike: We may be operating under a new name, but the offering is still based on the same compelling message we’ve always had. The people, the technology, the workflows, the network and the relationships – all of that is unchanged.
When you add all those elements together, you can see why the businesses have thrived, often in challenging environments. And when you add to that all of the capabilities that Marex has, we think that makes for a very compelling proposition for any fund that is looking to grow and become more profitable.
