When former Goldman Sachs managing director Talat Khan joined Cantor Fitzgerald in April 2019, the boutique investment bank had major plans to expand its equities and investment banking businesses across Europe.
As the new head of equities at Cantor Fitzgerald Europe, Khan was at the forefront of the ambitious plans and had several areas of focus upon his arrival at the institution.
He tells The TRADE the initial focus was on ensuring that Cantor Fitzgerald’s clients in Europe were aware that the execution services and content that had been developed on the US side of the business was accessible to them.
“Being a US investment bank that has undergone a big build over the past three years, our equities business globally has grown substantially, but we didn’t have that presence with the institutional and hedge fund community in Europe,” Khan explains. “Our team has changed and more importantly the products that we are aiming to be the best in have been segregated into several very core offerings.”
The equities division is part of the investment bank’s cross-asset group, which also encompasses the fixed income, prime services and investment banking divisions. Sales traders at Cantor Fitzgerald aim to have extensive knowledge across all products within the cross-asset group and are incentivised to service investor clients in all of those areas.
Across the European franchise, Cantor Fitzgerald targeted expansion across its various equity execution solutions, which includes program trading, block trading, Stoxx 600 equities, investment trusts, AIM-listed stocks, privates, ADRS and GDRs, US electronic and high-touch trading, equity capital markets distribution and event-driven strategies.
Khan explains the equities business saw significant opportunities for growth in several of the solutions, particularly in event-driven strategies and special situations, as well as AIM-listed stocks, investment trusts, and the private market.
“There has been much more accessible liquidity in equity trading and special situations that we have been able to locate from the electronic market making community,” he says. “We’ve managed to find block solutions for our clients in that pool, helped by our traders and salespeople understanding the risk profile of situations.”
To further facilitate the growth plans amid increased client demand, Cantor Fitzgerald Europe deployed new talent and products across the equities business.
Boosting access to the increasing retail liquidity was important to the strategy. Cantor Fitzgerald targeted the retail market making space and concentrated on tapping that liquidity to expand its execution solutions for institutions and hedge funds, particularly in UK AIM-listed stocks and investment trusts.
Khan reveals that discussions about the impact of retail liquidity has surged among Cantor Fitzgerald’s institutional clients in Europe. A perfect storm of zero commission rates, the rise of easy-to-use online brokerages and hugely increased market volatility has seen retail investment surge globally in 2020. For institutional investors, it can be difficult to interact with retail flow and pools of retail liquidity are often considered out of reach.
“We are very much a boutique investment bank and some institutional clients may not know we are extremely helpful in accessing retail block flow within the UK,” he adds. “We access a lot of that via growing retail service provider liquidity. One of our priorities is in ensuring that liquidity is making its way towards the institutional and hedge fund client base that we now service.”
As the events of 2020 and the global pandemic unfolded this year, Cantor Fitzgerald Europe noticed a shift in demand across more niche corners of the equities market. When the market became dislocated at the height of the volatility, a growing number of European clients began to enquire about special-purpose acquisition companies (SPAC) and non-listed equity – or private markets.
Khan explains the capital raising side in private markets is an area that Cantor Fitzgerald has seen growth, helping institutions and hedge funds access either primary or in some cases the secondary trading of these unlisted assets.
“Ultimately, we’re doing this to solve for institutions and for hedge funds demands and we’re pretty sure that this area in primary and secondary privates will continue to expand in Europe in future,” he adds.
The expansion plans across the equities division could so far be deemed a success. Cantor Fitzgerald’s market share in Stoxx 600 shares, for example, is up fourfold in the past 18 months, Khan claims. He adds that the institution has spent 12 months redefining its competitors and is at the stage now where the business is comfortable and aligned with its rivals.
While the pandemic proved difficult for many institutions in terms of continuing to provide execution services as demand increased during the more volatile months, Khan explains that consistently providing solutions through this tough period has been vital for the business. But remaining consistent in future is key amid plans to maintain and grow from that base.
At the same time, Cantor Fitzgerald seized the opportunity in 2020 to add new talent to its senior ranks from major institutions such as Bank of America Merrill Lynch, Credit Suisse, Deutsche Bank and Goldman Sachs. Talent is a crucial part of Cantor Fitzgerald’s growth strategy in trading execution services across the region.
“In that period of uncertainty, I think some of our competitors may have deemphasized parts of their execution business, which gave us the opportunity to get very talented individuals that we’ve been after for a while and accelerate those hires,” Khan says.
“The pandemic has accelerated our hires and expansion plans for program trading, cash equity trading and in privates. It’s accelerated our plans because we are nimble and agile enough and at the pace of growth that we are able to hire what we think is extremely good talent.”
Among the notable new hires is Karim Moussalem, who joined Cantor Fitzgerald from Deutsche Bank in 2020 as head of cash equity sales and trading. He was previously co-head of global equity at Deutsche Bank and also spent more than 10 years at Goldman Sachs as head of Europe delta one trading.
Similarly, Sonia Peterson joined Cantor Fitzgerald as head of institutional client coverage for Europe after six years with Deutsche Bank. She was previously head of US cash equity sales at the German investment bank and also held sales roles in equities and foreign exchange.
Within program trading, Conor Hamilton joined Cantor Fitzgerald in October in London from Bank of America Merrill Lynch where he previously spent 12 years in program trading execution. A month earlier, Phillip Sheridan was appointed to the event-driven team to provide commentary on events and advise on inventory opportunities. Sheridan formerly worked at Leste Capital and began his career as a program trader at Deutsche Bank.
In Edinburgh, Cantor Fitzgerald hired Cameron Wilson as head of cross product distribution for Scotland. He has previously worked at Deutsche Bank, Macquarie Group and MainFirst in equities across research, and sales and trading.
Other notable new hires within the equity trading business at Cantor Fitzgerald in 2020 include veteran Credit Suisse equity trader, Mark Slatford, Bank of America Merrill Lynch’s former head of UK midcap and real estate trading, Giles Warner, and director of equity trading at Deutsche Bank, Simon Mason.
Cantor Fitzgerald Europe will continue seeking new talent as its recruitment strategy remains at the centre of its approach to the equities business. It will also continue building on the cross-asset group and private market offering in response to client demand. And while Khan appreciates that being a boutique investment bank the business won’t be everything to everyone, the aim going forward is to be strong in those core areas.