“We have some of the smartest people in the industry – many of whom began as interns”
Ahead of the Sydney Hedge Funds Club evening on Monday 9th September, Hedge Funds Club’s Stefan Nilsson caught up with one of the Club’s key supporters, Gavin White, Group CEO of 26 Degrees Global Markets.
Last year, you marked the firm’s 10th anniversary by rebranding as 26 Degrees Global Markets and doing so with a spectacular launch event at the Sydney Opera House. Since then you have gone from strength to strength, including setting up new offices in London and Tokyo. What’s behind 26 Degrees’ continued success?
It’s hard to pinpoint just one thing! I would say a key factor has been our targeted, selective recruitment and the level of talent we have in our company. I believe we have some of the smartest people in the industry working at 26 Degrees, many of whom began their careers with us as interns whilst studying. We give them the freedom to innovate, to build, to solve problems, to collaborate, and I think that has allowed us to provide high-quality and bespoke solutions to our clients. I also think that our ability to adapt and pivot quickly to changing operating environments has stood us in good stead over the past decade. The finance industry and in particular the prime brokerage industry (as we are all aware) can change very quickly – we have seen this many times over the past 10-20 years. I think we have always been good at predicting these changes, allowing us to be proactive and not reactionary when these shifts occur.
You recently opened your new world HQ in Sydney at the historic Sub Base Platypus, a former torpedo factory and submarine base. Tell us about it.
We’re extremely excited and proud about our move into our new company HQ. The new office – as unique as the location and fit-out are – represents more than just a change of scenery (across the other side of Sydney Harbour), it’s a statement of our growth and success and our passionate belief that we can fulfil our lofty global ambitions. The office is purpose-built to help us scale, foster innovation, and build a workplace culture that’s second to none. It’s a place where we can work hard, collaborate effectively, and have a lot of fun along the way. So, while we have various different working areas and collaborative spaces, we have also dedicated a full floor to staff relaxation – including an indoor cricket pitch, golf simulator, ping pong tables, basketball halfcourt, worship room and yoga/Peloton room – to ensure our employees have a dynamic and engaging environment to work in and thrive! The precinct in which our office is located is extraordinary. A place where torpedoes were manufactured, submarines repaired and submariners trained. It is managed by the Sydney Harbour Trust and we are very keen to promote the precinct as a fintech hub for Sydney. Along with 26 Degrees, one of Australia’s fastest-growing companies, Leonardo Ai, is also a key tenant.
What type of hedge funds do you focus on servicing and why should they opt to work with 26 Degrees?
26 Degrees specialises in meeting the needs of emerging and small/medium hedge funds that are underserviced by the Tier 1 primes as regulatory reforms continue to constrain the banks. We understand the impacts of these changes on the industry and have positioned 26 Degrees as a full-service prime services provider to ‘fill the gap’ left by those Tier 1 firms. Our full-service offering, including global market access, outsourced trading, customisable reporting and capital introductions, positions us perfectly to service those emerging hedge funds that are resource-light and time-restricted. We pride ourselves on being responsive and providing our clients with tailored solutions to suit their individual needs.
You have expanded the services you offer your clients, including capital introduction services for your hedge fund clients. How are these value-added services being received by your clients?
The launch of our capital introduction program 12 months ago has been received incredibly well. To be honest it probably even exceeded our own expectations! Interestingly, we have seen demand from not only existing clients who are interested in capital introduction in addition to our PB services but also those who are interested in capital introduction as a stand-alone service. Since launching the program, we’ve built a community of over 100 allocators and fund managers from across the globe and facilitated multiple meaningful introductions. We now have a stand-alone capital introduction team led by Tiffany Besnard, our Head of Hedge Fund Sales and Capital Introductions, who really emphasises building long-term partnerships with our funds and allocators. This is an area in our business we believe will continue to grow and where we can add a lot of value to the industry and our clients.
How have the needs and wants of hedge funds evolved over the past 11 years or so since you launched the business?
The smaller and emerging end of the hedge fund industry has been almost completely abandoned by the big Tier 1 PBs. These clients are now seeking the full spectrum of services from 26 Degrees, rather than coming to us for just PB, they are now using us for the peripheral services the banks previously provided – capital introduction, outsourced execution, marketing advice, etc.
How do you think the prime brokerage industry will evolve from here?
We see it continuing in the same vein that it has over the past decade. As regulatory reform and more robust capital requirements in the form of the Basel Accords continue to take shape, we expect further consolidation among the Tier 1 and 2 PBs to occur. Those smaller and emerging hedge funds will continue to struggle to access the markets and services they need to remain competitive, which presents an opportunity for independent, full-service prime service providers like 26 Degrees to really step up and support those underserviced segments.
