YouSaid · the spoken record

Paul Britton

lines on the record: 44
first: 2025-02-28
most recent: 2025-02-28
sittings or episodes: 1
sources: podcast

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“And I think that's the interesting question. But if you have a repeatable task, I don't want you doing that because I want you doing tasks and work that are higher value and that's good for me, that's good for you. And I think that's how humans stay ahead of the game with this first phase. So that's how my message within my firm is this is an unbelievable tool that has to be harnessed to be able to the first phase is to be able to reduce the repetitive workflows that we have within the organization so that we have the ability to work on other higher value workflows.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“A relatively small firm rate compared to Goldman Sachs. We're 330, 340 staff, but we have an ambitious goal and target of trying to save 50,000 hours. And I do these small get-togethers called CapChats of five or six individuals within the firm. And my message is quite straightforward. If you have a workflow, a work function that is repeatable every day, you have to be thinking Because if you don't, then you are at risk Because in three or five years' time, I believe, and there's definitely a segment within my organization that thinks within nine, 12 months. This is all going to be done”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“I think there's an awful lot of discussion around the impact of AI. There's not a day, an hour goes past where we're discussing the impacts of it at Capstone. It's moving so quickly. And I'm fascinated as to see where it ends up. Fascinated to see the role it can play within industries, within my business. And it's got even more fascinating in terms of just you feel as though the price point and accessibility is going to be a game changer, which that really excites me from understanding how to use this within our businesses over the next three to five years.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“So I used to, for those of you who are listening to us from an audio, I'm wearing a boot, I have torn my Achilles on a tennis court. So I love tennis, I love sports. I've always been active in sports now. I am not so active with a repaired torn Achilles.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Which allowed him to always be at the forefront of what they did. And I think his philanthropy was he always spoke so much about his mission, his purpose. And that really resonated with me.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“That's a good question. I'd have to say I didn't know, Mr. Simons, the late Jim Simons, but I'd always try and find a time of listing that he, if he did talks, et cetera, talking about curiosity. Clearly, he had an IQ 10,000. More than me, but”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“It was from my grandparents and my grandfather was a fruit and vegetator and he always told me the importance of working hard. And then I had this crazy Scottish grandmother who was just an avid traveller. And they certainly weren't wealthy. But any opportunity that always be going around the world, and that's what she said to me. She says, the greatest gift is sea in the world.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“And having that vulnerability and humility to be able to say, I'm really sorry. I just didn't understand any of that. Then allows people to be like oh okay, I can show vulnerability as well. And then you create, I think, a better culture.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I don't know whether Paul, but I try to be as consistent as possible. So that people always know what they're going to get. Good or bad, but they know what they're going to get. And secondly, is to, as a CEO show some vulnerability. People respond to this notion of when I was sitting a meeting and be like, I really didn't understand any of that. And there's lots of people that will be like, is he really as dumb as what I think he is?”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Think consistency is key in great CEOs, that people want to feel as though that they know what they're going to get. Now, there'd be lots of people within my organisation being like, yeah, last Tuesday.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Follow your process. Process will always get you out of trouble and be curious. So curious around don't believe that your process is always going to be, your process can always be improved, refined, augmented, and you get that through being curious.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“And so this notion of the between 2008 and 2020 that you would have a coordinated response from the G5 of, okay, we're all going to lower rates by 25 basis point, whatever it is. I think that's And that really is, I think, good news for the industry because now you don't have this coordinated response. You have real dispersion around. Policy making and central bank interventions or responses, etc. And I think that's good from an alpha perspective.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“And I think that there has to be economies having to deal with their COVID responses. They're still having to deal with their COVID responses. Because of the seismic response that central banks made. And that's going to be felt for many, many, many years to come.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“And so, my guess is I think you are on the same page now, we're not unbiased in this regard because we're rooting for hedge funds, of course. But my guess is if you're right, then the future will be favorable for active management and for what hedge funds do the best hedge funds do.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“And it would frustrate me of seeing central banks be very active in wanting to calm markets, wanting to participate in markets, which I didn't think necessarily they had a place and let free markets do what they should do. So I think that's the biggest change over the next five, ten years that we will see. I think that translates into the elasticity of markets being greater. So this notion of you could see perhaps the VIX at 10 where really the fair value of it should be at 15, but because of liquidity issues. That will be the same on the upside as well. And then I also think these correlations that we have relied on historically, I'm not too sure whether they're a stable or as reliable as what we have become comfortable with.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Their presence and their participation. And I think that central banks were critical in that early phase of stabilizing markets. And I don't really have a better answer or solution of what they did to be able to ensure that the financial markets survived and the financial system rebounded from where it was. But I think they just overstayed their welcome. And I think that they got enamored with this notion of getting into the growth game with all good intentions of saying, I think that we can play a role of being a growth partner to this economy. And I think that that won't happen again. Now, I think that that's also this notion of having a Fed put is the size of that put, I think, has gone down dramatically. And so that to me, who runs a trading organization really, it's just much more interesting.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“I think that these past seventeen years have been an anomaly post-GFC with the intervention, maybe it's a strong word, participation, contribution of central banks over these past X amount of years. I think was an anomaly.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“But it's very fast paced. And I say to people if it's not fast paced, that's a problem. A real problem because the evolution and the innovation in the business goes at such a rate that if you aren't fast-paced and you aren't moving, then you're dying. That's the thing that keeps me up at night. It is like you've got to drive the car at a sensible pace, meaning you can't be in a position where you are going too fast because you can run the risk of having a wreck and coming off the road. But the thought of going too slow and seeing who's behind us in our rearview mirror, that motivates me. And that's what keeps me up at night.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Rather than just simply relying on it to pay out over seven, 10 year cycle, why not use some of that outperformance to make a good strategy great? And those are interesting conversations for us.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“That they look to be able to say, We don't want to be in a position if the market's down 25%, we have to raise liquidity because with capital calls, we don't want to be selling equities. So we want to be able to think about ways where we can have a strategy that helps us deal with that liability that we know we have. And I think that makes all the sense in the world. The way I think about it is that if the private market has demonstrated over the last 20 years that they can deliver 300 basis points over the benchmark, then I think it makes all the sense in the world to say let's invest 20 basis points, 30 basis points, 50 basis points to help that portfolio be more liquid.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Everything else. So we've seen some of that occur. And then, secondly, we've engaged with institutional ambassadors around how do you think about liquidity in your portfolio when you do have a large private allocation and you are running these assumptions of saying, okay, if you do have a drawdown, what do you think your net distributions and net outflows capital calls are going to be? And so it's interesting that it's less about like a tail hedge, but it's more about of a liquidity function.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“And so I think there's a dialogue, an ongoing dialogue of saying, all right, how much liquidity do we need within a portfolio, an institutional portfolio? And that impacts capstone in a couple of ways. One, you've seen hedge fund allocations and Goldman wrote about this in a great piece that you just put out, that because the privates are not distributing as much over these past two, three years, that impacts allocations across the broader sector.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“It's kind of the after effects. So I think the private industry has done a number, has delivered outsize performance in certain areas, but it's a different part of the portfolio. I think some of the issues that we see historically of these past two, three years, the hedge fund industry and the private industry are competing. For the same And we, the hedge fund industry, want to be able to demonstrate to the end investor as to why we should play that role within the portfolio. And the private industry is doing exactly the same. I think over these past two, three years, there's just been a conversation, a dialogue around institutional investors around this notion of liquidity.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Humans are human. Humans are like, let's shut the casino down. Right, I don't apply because you don't know. You just don't know”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, the way I try and describe it is our business is a large casino and people come in to the derivatives casino and our odds are 51.49 on a regular When you get those types of events of the VIX moving at that level or distress going through the market, you have the ability, you have the odds change. And the odds go to 55 45 or 5743. And so I just encourage my teams to say, we want to play more. Because the odds now are more in our favor, for whatever reasons there's more alpha available. And so you have to trust your process. You have to trust your infrastructure, your systems, you've got to trust your instincts to be able to bet more.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“One question, which is I think at your core, you are still a risk manager. You still retain that trading instinct, the risk management instinct. You're running to big business. Have many people working for you But you wake up August 5th. Not sure where you were. I was in the middle of nowhere. I was 20 miles from the Arctic Circle. And I thought, oh, this will be interesting. And the VIX is at 65. I presume you kind of take off the CEO hat for a moment and you put on the head of risk management hat.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Which is a big business where one day you have a stock or a sector that perhaps gets mentioned and that can cause terrific volatility, but it's stock or sector-led. And that is not necessarily at the macro level. So not to get too technical, but clearly realized correlation is extremely low because you've had Awful lot of dispersion across different sectors, different stocks, etc. But ultimately, the indexes just haven't really moved that much. You've had big moves across the different sectors and stocks, but not necessarily that hasn't translated into big index-led moves here in the US.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Because it's an unconventional, unpredictable manner of how policies are being implemented, I think that can be confusing and draw anxiety from the marketplace. So if you didn't have that, you could maybe make the case that the VIX could be lower. Because clearly Presidents Trump's policies and campaign pledges were very pro-growth and very business friendly. And so you would imagine that would be supportive of risk assets and thus less volatility in the system. I also think that there is an enormous amount of dispersion.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Square it because if you think about what is trying to be accomplished for this new administration you have on one side a very pro-growth pro-business agenda which you imagine would be constructive for asset prices the way that the agenda is being formulated and being presented is unconventional and that's I think the push and pull of what markets are trying to digest We're sat at this table in three years' time and we look back as to where we were sat here today, I imagine that we're going to look at one another and say, well, that was pretty obvious. Why didn't we do that? Why didn't we have more of that?”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“You think about the global footprint, you can draw parallels to where the largest pools of volume is, that typically correlates into our risk-taking. In terms of saying that our largest risk exposure has always historically been the US just simply because the volumes here in the US have been the greatest. An interesting market that we're looking at and exploring and have some exposure in is also the China market. They have a very large deep equity market less on the derivative side. But that is essentially how we think about our exposure from a risk standpoint. Volumes first that should equate to the alpha pi being the greatest and in our role is simply mining that alpha and then extracting alpha from those markets.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and it's not even elite. It's the great thing about the derivatives markets is people use them for different reasons. If everyone just focused on the volatility component of the derivatives markets, that would be a challenge for us. Don't they focus on using derivatives for a whole variety of different reasons? And even when you speak to some participants of the derivative markets who are sizable participants in them and sizable users of derivatives, they don't really care about the same alpha factors that I do. That's not to say that we're elite, it just means that we're after something different to the average participant and the average user of the derivatives markets. And that's what I think makes what we do relatively unique and a relatively unique source of alpha for investors.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“For our investors. It sounds like one part of that is liquidity begets liquidity. In other words, if the market's getting bigger because of more market participants, you can take more risk and scale your risk. But also, it's going to create alpha opportunities because not all of that money, not all of that capital flow will be as elite perhaps as you all.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“A higher alpha proposition just simply if there's more volume going through those pipes and there's more volume going through our filters then that should translate Into a higher alpha proposition for our investors.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Even back in those days. And so 20 years ago, I think the derivatives market was really used by the professional community unless in, and there were certainly big pockets of retail participation. But what I think has happened over these past 20 years is the evolution of the derivatives market to make them more mainstream and to make them more appealing to a broader audience. And there's lots of people that I think have done a very good job around the exchanges, the dealers, the banks, etc., to be able to figure out ways of enhancing the derivative offering to a wider group of participants. For us, that's good, meaning that as long as there is more volume going through those pipes, then that should translate into”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“So when we started this back in 2004 and we took institutional money in 2007, that discussion around what size, what capacity could you really be, I always was very, I was surprised by investors would always push back on us becoming bigger than 500 million or because”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“So that was a moment in time of extreme stress But acknowledging that you're literally putting one foot forward and learning from the process. So from an investment standpoint, but that ultimately defined the firm.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“And I remember distinctly going there on a regular basis, not because I was seeking solace from a higher power, but I found it so overwhelming of what was going on. And I needed a place of solace and a place to try and collect my thoughts and definitely ask for help from a higher power to be able to try and help me get out of this mess I'm in. And so I'd end up having these wonderful conversations with these terrific vicars and priests at Trinity. And then I'd come in on a relatively frequent basis and they would be like, how are the volatility markets today? Right.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“I think that the most difficult from an investment standpoint is definitely Q4 of 2008. I'm not particularly religious, but I remember going to the bottom of Broadway at the intersection of Wall Street as a beautiful church called Trinity Church right by here.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Made money for investors, or just that things worked as they should have done. And that really comes from the experience, the lessons, the mistakes, candidly, the stupidity of things we've done in the past. And then 2020 was really a test to see whether we've learned or not.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Yes, the January 2008 story was great. We made a lot of money for investors. We did spectacularly world, but it gave us, looking back at it, a real false confidence. And then it went spectacularly wrong in Q4 2008, where we realized that, or I realized that we didn't have the appropriate rigor framework around risk that we needed to. And then fast forward to 2020 where you had an extraordinary event, it was now, you know, there was lots of sleepless nights, but you could feel that the framework was there and the level of comfort that gives you as an investor, as a business owner, knowing that all the processes are in place, people know exactly what to do. That was a very gratifying year. And not because we...”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“So I remember distinctly January of 2008, this story ends badly, by the way, but it was one of those first aha moments where I'm like, wow, this could actually really work. It was MLK Day in January of 2008, and one of the large European banks disclosed that they had a potential issue and there was an awful lot of volatility on that holiday day in the US. And we made a decent amount of money. And that was one of the moments where I'm like, oh, this is, I get this. You have sizable capital where you can put reasonable amounts of risk on and you're going to get rewarded for that. And that was my first kind of aha moment of saying, all right, this has to be a scalable business. And I see how this can really work”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“Listen, I can't complain. Sat here with you. And I remember distinctly people being like, gosh, if you ever get to a billion dollars, and that sounded incredibly scary to me. And then you just, you trust the process, you trust the people around you, and you're sharing your story and your vision with investors to be able to see where the investors buy into that narrative and that story as well.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“And who knows today I could be sat here having capstone securities and competing alongside Oversight securities or citadel securities, I think that's a relatively low probability outcome. So I said, you know what? I think that there's an opportunity to. It always frustrated me of not knowing what was going on on the other side of the world and what was going on in other asset classes. So I said, you know, I'd like to build a global business. I'd like to build a business that encompassed every asset class. And I think this is useful for institutional investors. And I certainly didn't have that fully formed in terms of what the end game looked like. But that really was how I thought about it at the beginning, to build a big global business that covered every asset class.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT
“My DNA is in the options market making space. And we built a relatively successful firm. And then I moved over to the state in 2000, 2001 to look to expand our European operations into the US. By kind of 2003, 2004, I realized that the market making business and the providing liquidity business was really becoming a technology arms race. So the more CapEx you would spend, the higher probability that you had of being the most successful in the game. So it felt to me like it was a winner-takes-all game.”
2025-02-28 · Goldman Sachs Exchanges · Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund · IDENTIFIED FROM THE TRANSCRIPT