TD Execution Services Limited (“TD Securities”), formerly Cowen Execution Services Limited, is building on its strong foundations in the European equities market, delivering the thoughtful approach to liquidity and high-quality execution it is known for. Since integrating into TD Securities (part of The Toronto-Dominion Bank), the team has expanded its capabilities with a clear focus on driving value for institutional clients.
Carl Hayes, James Baugh
Leading this effort is Carl Hayes, head of European cash equities, who brings extensive experience from his senior roles at Cowen, Deutsche Bank and HSBC Securities. Since taking on the role last year, Carl has enhanced the firm’s client offering, working alongside James Baugh, managing director and head of European market structure. James’ expertise in liquidity strategy—developed at Cowen, Citi and the London Stock Exchange—helps guide the firm’s approach in a complex trading environment.
In this interview, Hayes and Baugh discuss priorities, milestones and what’s next for the firm. They offer their insights on navigating liquidity challenges, adapting to regulatory shifts, and helping clients find opportunities in an increasingly fragmented market.
Carl, what have been your main areas of focus since stepping into your role?
I took over the role in mid-July, at a particularly crucial and exciting time for us. One of the key milestones during this period was the full launch of our international and US equities trading model in our TD Securities’ Dublin entity. This means we can now execute for continental European clients, something that was previously very limited before the TD Securities acquisition due to complex Brexit regulations.
We have since rapidly grown our Dublin operations, including onboarding a team of four sales traders to help build out that business. In addition, we’ve hired a prime expert in Dublin to help our North American prime brokerage business as we globalise that platform and extend our synthetic prime solutions offering to our European clients.
We also work very closely with our colleagues at TD Securities and across TD broadly to offer our clients a true full-service, multi-asset class execution platform. This evolution aligns with the needs of our global institutional clients, and we are well-positioned to deliver on those expectations.
We are extremely proud of what we have achieved in the last five years – first under Cowen, which later became TD Cowen before our transition to TD Securities in December. Now we’re looking ahead to the next five years, including what we can build to better service our clients to make sure they get the results they need. We are taking a very strategic approach to defining our next steps and we expect multiple exciting announcements over the next 12 months. The foundation is there — it’s proven that we have the right team and expertise in place and now it’s about expanding on that success to deliver even greater value to our clients.
James, how do you see the European equities market evolving?
The European equity markets—particularly the secondary markets—are at quite an interesting juncture. On the one hand, we’ve seen an increase in bilateral liquidity provision which has taken a chunk of liquidity out of the public markets. On the other hand, we are starting to see interesting innovations emerge, such as dark midpoint books, periodic auctions and benchmark crossing opportunities. While these innovations bring fresh possibilities, they also exacerbate an already fragmented landscape for publicly addressable liquidity. Net-net, while competition and innovation are a good thing, such as potentially lowering the explicit cost of execution, we also see this undermining execution performance and ultimately leading to an increase in the implicit cost of trading for our institutional clients.
Layered on top of this are the impending regulatory changes which could positively or negatively impact liquidity dynamics. Notable among these is the introduction of a consolidated tape and the implementation of a new single cap for dark trading in Europe, set to take effect in September.
When we think about the secondary markets, we also must consider the fact that we remain hostage to the lack of primary issuance in most European markets. Without more inward investment, the velocity of trading in European names is going to remain under some significant pressure. There’s a myriad of reasons why Europe finds itself in this position, but I firmly believe that more transparency and perhaps less fragmentation in the secondary markets, could—alongside several well-documented initiatives in the primary space—help reverse the downward trend as the international community looks for new investment opportunities.
How are you helping your clients navigate this environment?
All of this complexity and fragmentation of liquidity makes it difficult for institutional clients to find natural block liquidity and it’s not getting any easier. I’d say that those who partner with brokers who have a deep understanding of liquidity dynamics and take a strategic, thoughtful approach to engaging with available liquidity in real-time will be best positioned to achieve outperformance and reduce implicit trading costs. This should ultimately help drive fund performance.
TD Securities’ ability to grow our business in Europe has been driven by a clear grasp of these complexities. More significantly, it’s our razor-sharp focus on execution quality aimed at reducing implicit costs of execution that sets us apart. This focus is complemented by a hands-on, highly experienced approach to coverage. Not just across high touch, but across the entire stack, including our electronic, low touch platform. This comprehensive framework has allowed us to tailor execution outcomes to meet individual client objectives.
It’s important to emphasise that when we talk about implicit versus explicit costs of trading, the implicit costs are far more relevant than the explicit costs of execution when working those larger multi-day institutional block orders.
We are very excited about being able to offer European clients better execution outcomes and lower costs of execution, and that’s really going to be the area of focus for us over the coming months and years.
Carl, against this backdrop, what’s next for TD Securities?
We’ve been on a tremendous growth journey over the last five years. Taking that to the next level, in what is undoubtedly a challenging market, is exciting for all of us. With one of the strongest teams in the industry, we’re exceedingly well-positioned to lead our clients through increasingly complex and volatile equity markets while continuing to deliver best-in-class execution services.
Looking ahead, our focus is on building our business and continuing to find new ways to help our clients better execute. We have several exciting initiatives in the pipeline to achieve this and further enhance the value we bring.
As some of the larger global banks consolidate more of the market, our ability to offer clients a genuine alternative whilst maintaining the best-in-class execution we are known for, is a good news story for the market. Being able to take this approach to a much wider audience is a huge opportunity and I’m confident that this business will grow exponentially in the years to come.
