Capabilities

Prime Services

Cowen offers a comprehensive suite of brokerage and related services that provide investment managers with solutions that are customizable and scalable.

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Cowen’s prime services business was built by former investment managers to serve hedge fund managers, managed account platforms, institutional investors, family offices, and registered investment advisors with turn-key solutions designed to unburden our clients of their operating responsibilities and allow them to focus on their core competencies – investing.

Our staff operates from multiple offices across the US and through affiliates in the UK, and currently serve several hundred investment managers who invest across a variety of structures and asset classes.

 

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Our offering features:

  • Seasoned professionals supporting comprehensive brokerage and related solutions for investment managers
  • US prime brokerage
  • International prime brokerage
  • Electronic and high-touch execution
  • Outsourced trading solution
  • Commission management
  • Financing and stock loan
  • Middle and back office support
  • Pre and post trade compliance
  • Capital introduction
  • New launch consulting

The origins of our business date back to 1995, and at the core of the team that leads the firm are seasoned professionals who have worked together for many years and developed our comprehensive offering.

US Prime Brokerage

Cowen is an introducing broker to, and has correspondent clearing agreements with, the financial institutions listed below, providing our clients the opportunity to custody the funds they manage at one or more of these world renowned firms:

US Equities, Options and Bonds; International Equities and Bonds

  • Pershing LLC, a subsidiary of Bank of New York Mellon
  • Merrill Lynch, Pierce, Fenner & Smith Incorporated (Broadcort)
  • Merrill Lynch Professional Clearing Corp. (1)
  • Goldman Sachs & Co.
  • Industrial and Commercial Bank of China Financial Services, LLC
  • Interactive Brokers, LLC

 

Futures

  • ADM Investor Services, Inc.
  • SG Americas Securities, LLC (2)
  • Goldman Sachs & Co.
  • INTL FCStone Inc.

(1)  US Equities and Options only

(2) The relationship with this firm is through an Introducing Broker Agreement.

With client accounts held on the books of these institutions, the respective banks are the counterparty. Cowen, as the introducing broker, provides all of the other prime brokerage services and serves as the single point of contact for the client.

International Prime Brokerage

Through its London-based affiliate, Cowen provides a full range of prime brokerage and outsourced trading solutions to UK and EMEA-based fund managers, including multi-asset custody and execution.

Cowen’s UK based team is also available to our US based clients for trade execution services in local markets.

 

Financing and securities lending available on:

  • Equities, synthetic equities (swaps), ADRs/GDRs, ETFs, Warrants
  • Fixed Income Securities (government bonds, convertible bonds, corporate bonds)

Clearing and Custody offered on the above in addition to Futures and Options on all major exchanges and FX for hedging purposes

Electronic and High-Touch Execution

Cowen believes in providing our clients the opportunity to trade in the manner in which they have become accustomed to. The EMS’ we have integrated complement our clients’ needs, and our agency and specialized trading desks in a variety of asset classes provide an additional option. Trading technology platforms include both broker neutral and broker specific applications.

Our experienced outsourced trading desk offers our clients another, more hands-on alternative to meet their trading needs.

  • Bloomberg EMSX
  • Eze Software Group
  • Neovest
  • RealTick
  • REDI
  • Silexx Financial Systems
  • TRAFiX

Outsourced Trading Solution

Cowen provides investment managers with an effective and cost efficient solution for their trading needs. Our solution is full service, multi-asset class, and global, and is differentiated by the full transparency and complete operational support we provide.

 

Key Benefits of Our Outsourced Trading Solution

  • High-touch, complete outsourced trading solution or supplement to an existing trading operation.
  • Leverage an established and experienced team of traders, support staff, and trading and reporting infrastructure.
  • Exceptional value that functions as client’s trading desk, without the cost of building and operating such capability.
  • Agency-only model avoids potential conflicts that may arise at firm’s making markets or trading for their own accounts.
  • Allows clients to concentrate resources on alpha-generating functions, including research, portfolio construction and risk management.

Our Differentiated Model

  • Our traders and operational support staff truly function as an extension of client’s firm.
  • Our team processes all documentation, opens broker relationships as desired by client, and leverages existing ones for client’s benefit.
  • Our traders execute directly with designated brokers in client’s name, representing ourselves to those brokers as client’s traders. This reinforces the client’s “brand” in the broker-dealer community, but also leverages our existing outsourced trading relationships with such brokers for purposes of research, conference attendance, corporate access, and syndicate.
  • Client trades with designated brokers are executed at commission rates negotiated by client and broker. Commission budgets are set and continuously monitored by our traders to optimize the services client needs to manage his/her portfolio, such as research and corporate access.
  • Our operations staff performs daily trade recaps with all brokers, and reconciles activity with client’s prime broker/custodian.
  • We provide clients with real-time portfolio monitoring tool, shadow reporting, and multi-custodian portal as part of the base service agreement.

Commission Management

Cowen offers fully compliant soft-dollar and commissions sharing management and access to independent research and brokerage services.

Our commission management team can implement and oversee a commission management program with Cowen executions or executions with away brokers to pay for research and brokerage related services via soft dollars or commission sharing agreements with other broker-dealers.

 

Our commission management portal provides a virtual window for the submission of invoices, monitoring payments, tracking balances, and producing management reports across multiple brokerage relationships.

Cowen’s commission management program does not charge our clients or the executing broker any fee.

Financing and Stock Loan

Our clients benefit from a variety of financing options and efficient short term borrowing.

Portfolio Financing

Cowen’s offering provides our clients with a variety of portfolio financing options. These options will depend on specific investment strategies, asset classes, gross and net exposures, and other considerations. Financing options range from traditional Reg T (initial 50% margin) accounts, to those with varying degrees of enhanced leverage, including full Portfolio Margining (15% margin). The firm’s experienced client service personnel works with clients and the clearing firms to optimize account financing using internal risk tools.

Stock Loan

Short sales of easy-to-borrow securities is facilitated by electronic approvals through the various execution systems, and the firm’s client support staff works diligently and efficiently to locate hard-to-borrow securities through each of our clearing firms.

Fully-Paid For Stock Loan

Our client service team also reviews client accounts daily in search of fully paid for securities that are designated as hard-to-borrow and will attempt to facilitate lending of such securities on behalf of clients by the respective clearing firms, allowing clients to earn incremental returns on their holdings.

Middle and Back Office Support

At Cowen we understand that our clients are principally focused on making the investment and trading decisions for their client assets, and that they depend on us to deal with the administrative and operational matters related to their account. The firm prides itself on being client-driven, and aims to provide our clients with a level of comfort that they have a capable team supporting their business.

New Account On-Boarding

Our team of seasoned professionals can provide advice on how best to execute a new fund launch and to grow an investment management business, as well as accommodate the efficient on-boarding of new client accounts, and provide trading, middle and back office, operational and technology solutions.

Operational Support and Portfolio Reconciliation

Our operations and support team assists clients with all post-trade activities:

  • Clearance and settlement
  • Incoming and outgoing wire transfers
  • Security level reconciliation for realized and unrealized P/L and position quantities
  • Portfolio report preparation
  • Delivery of portfolio accounting reports via our secure web portal and/or automated e-mails
  • Client account data can be made readily available for enhanced portfolio and/or risk analytics and reporting, should those be contracted for separately
  • Interaction with custodians, away executing brokers, fund administrators, and auditors, as necessary, on behalf of client accounts

Pre- & Post-Trade Compliance

Through the EMS and OMS providers integrated with Cowen, our clients can implement a variety of pre-trade compliance rules to monitor the activity in their portfolios and ensure compliance with those guidelines.

Our comprehensive portfolio reporting and analytics provides our clients the tools to review and analyze their portfolios for post-trade compliance.

  • Position limits
  • Exposure limits
  • Concentration Limits
  • Liquidity limits

Capital Introduction

We view capital introduction as a serious reputational commitment by our firm and approach the effort from the investor’s perspective. We focus on the investment merits of each manager, and make every effort to understand their investment strategies, operational capabilities, and performance track record before agreeing to introduce them to allocators.

Benefit to Managers

We work to gain a clear understanding of our clients’ investment strategies, goals, and objectives, which allows us to conduct a consultative approach to capital development, including providing assistance in assessing our clients’ marketing materials, critiquing their investment presentations, preparing them for investor meetings, and opining on their overall marketing strategy. We also leverage the information flow our team acquires through our relationships with several hundred hedge fund investors who invest with emerging managers, and share that knowledge with our clients as we consult about introductions.

Benefit to Allocators

We believe we are in somewhat of a unique position as we serve a large number of managers through our prime brokerage unit and have a great degree of transparency into their performance and risk characteristics. We also have an opportunity to review a number of emerging and established managers on a regular basis who are introduced by our prime brokerage sales team or seek us out to potentially provide specific services.

Targeted Introductions

Our team maintains a regular dialog with the firm’s allocator contacts and works to gain insights about their experience with managers and the needs they need to fill. Armed with such information, we set out to search for managers whose strategies and return profiles match these needs from among the managers in our database, and arrange for one-on-one meetings. As part of our effort, we regularly host investor meetings at which managers have an opportunity to discuss their investment strategies and return profiles, and respond to inquiries from allocators.

Managed Account platforms

Our firm has developed strong relationships with various institutional investors who allocate sizable sums to hedge fund managers via managed accounts. As we serve these clients and their managers on a variety of levels, we are uniquely positioned to refer them to emerging managers we uncover in the regular course of business.

New Launch Consulting

Our prime brokerage sales group has always functioned in a consulting capacity, helping managers to understand what’s involved in launching a fund and managing its growth. This is perhaps the most important service we can provide as it sets an appropriate expectation level with prospective clients. It also allows us to showcase our extensive knowledge of the hedge fund space and the comprehensive range of services we can offer clients. We have developed pre-launch “how to” booklets and spread sheets that managers find particularly helpful. We have helped hundreds of managers successfully launch new funds over the years, and remain available throughout the relationship to provide advice on growth options, new hires, seed investor opportunities, and other such issues that arise.

Recent topical essays by and interviews with Cowen personnel:

  • In the end, only performance will matter – HFMWeek, October 2016
  • Hedge fund headwinds: Performance is the solution – HFMWeek, September 2016
  • Why Europe? – HFMWeek, September 2016
  • Assess the scale of a prime broker’s operational support – Hedgeweek, May 2016
  • What lies ahead? – HFMWeek, December 2015
  • Emerging hedge fund managers and their prime brokers: what’s next? – HFMWeek, September 2015
  • Filling the void – Hedgeweek, June 2015

Portfolio & Risk Analytics

We provide investment managers with access to various middle and back office services that facilitate their workflow requirements and portfolio management needs.

Portfolio and Risk Analytics

These include but are not limited to a complete suite of accounting and portfolio appraisal reports in addition to select risk reports. The suite of reports include:

  • Exposure reporting
  • P&L time series analysis
  • Attribution analysis
  • Investment strategy allocation
  • Stress testing
  • Limit exception monitoring

Middle Office Support

These services begin with an overview of a firm’s administrative systems and processes and end with a roadmap showing how to boost efficiency, accuracy, and transparency across an enterprise’s entire workflow. In addition to analyzing workflow processes, the solution offers the following related value-added services:

  • Trade capture and reconciliation, P&L, performance measurement, confirmation of over-the-counter (OTC) derivatives trades, and management of reference and corporate actions data
  • Post trade but pre-settlement activities including trade processing/support (confirmation and allocation), position and trade reconciliation
  • Establish and manage relationship with fund administrator for daily, monthly and annual reporting
  • Selection and implementation of all internal systems including portfolio management, accounting, trading and risk management
  • Development of reporting systems for internal and external distribution, including shadow books and records

Launching A Fund

Starting an alternative investment fund is a formidable undertaking that requires careful planning. Cowen has a significant amount of insight into the requirements for a new fund launch and experience helping managers navigate the various growth phases.

Contact prime-info@cowen.com for a copy of the full report.
Insights & Commentary

Prime Services

Nov 7 2017

Asset Raising Better, Increasingly Focused on Alpha

Brett Yarkon and Jack Seibald, of Cowen Prime Services, assess the reasons for the renewed interest from allocators in utilizing hedge funds as risk diversification tools

Awards

2017
Named Best Boutique Prime Broker, HFMWeek US Hedge Fund Services Awards
Named Best North American Prime Broker, Hedgeweek USA Awards
Named Best Prime Broker - Innovation, HFMWeek European Hedge Fund Service Awards
Named Best Global Prime Broker from Hedgeweek
2016
Named Best Boutique Prime Broker HFMWeek
Named Best North American Prime Broker by Hedgeweek USA
Named Best Global Prime Broker from Hedgeweek
2015
Named Best Boutique Prime Broker by HFMWeek
Named Best North American Prime Broker from Hedgeweek*
2014
Named Best Boutique Prime Broker Award from HFMWeek*
Earns top scores in multiple categories of Global Custodian's Prime Brokerage Survey*
Named Best North American Prime Broker from Hedgeweek*
2013
Named Best Boutique Prime Broker Award from HFMWeek*
Named Best Prime Broker North America from Hedgeweek*
2012
"Highly Commended" in the Best Boutique Prime Broker, HFMWeek US Hedge Fund Service Awards*
* Formerly Concept Capital Markets

Leadership

The business is managed by a team of seasoned professionals, whose core has worked together for many years and developed the foundation of our comprehensive prime services offering. As former investment managers, our team is uniquely equipped to understand and anticipate our clients’ needs and preferences, and deliver tools and support services that will assist them in managing their businesses.

General Contact

North America Prime Brokerage

+ 1 678 405 4200
+ 1 646 690 3100
prime-info@cowen.com

International Prime Brokerage

+ 44 (0) 20 7071 7555
prime-info@cowen.com

Outsourced Trading Solution

+ 1 646 690 3100
prime-info@cowen.com

 

Prime Brokerage Trading

+ 1 646 562 1688
+ 1 678 405 4205
prime-trading@cowen.com

Fixed Income Trading

+ 1 516 833 8532
prime-fixedincome@cowen.com

Capital Introduction

+ 1 646 562 1496
prime-capintro@cowen.com

Operations/Client Service

+ 1 516 833 8533
+ 1 678 405 4200
prime-clientservice@cowen.com