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guardian.co.uk – Morgan Stanley survived the recent panic in financial markets, but its prime brokerage business may never fully recover.
More than a third of Morgan’s prime brokerage assets went out the door during the past month — some rivals said attrition could be as large as one-half — as investors unnerved by the credit crunch lost confidence in the bank.
Across Wall Street, hundreds of investment funds that relied on broker-dealers established accounts with commercial banks boasting stronger credit. The moves have shaken up a business long dominated by Morgan Stanley, Goldman Sachs Group Inc and Bear Stearns.
"It’s a $2 trillion business and in normal market conditions, people kill themselves to move 1 percent of market share. In recent weeks, probably 35 to 40 percent of global market share has been redistributed," said Alex Ehrlich, global head of prime services at UBS. "Never has there been a more disruptive period."
The Australian – David Gray, UBS’s head of prime services in the Asia-Pacific, says: "In the next three months, people will make decisions about whether they want to continue their business that may prove uneconomic for them," Hong Kong-based Mr Gray said. "Fund managers are quite a hardy lot who don’t give up easily; they’ve gone through a couple of crises."
About 20 per cent of hedge funds in Asia, which underperformed rivals in the US and Europe, are profitable this year, according to Mr Gray. Their performance diverged from declines of 40 per cent to gains of 20 per cent, he said.
New York (HedgeCo.Net) – RBC Capital Markets has unveiled its newest venture, the Global Prime Services Group that will provide comprehensive support and a vast platform of services to hedge fund and mutual fund managers as well as institutional asset managers.
Global Prime Services Group comes at a time when hedge fund managers and other institutional money managers are in need of a specialized tier of services. By providing an integral package of service providers and prime brokerage, clients are gaining the robust array of multi-asset class products and services needed in today’s complex and ever-changing markets.
“Building the Global Prime Services Group enables us to truly partner with our clients,” said Greg Mills, head of Global Equity Sales & Trading for RBC Capital Markets. “We are now able to provide a fully consolidated platform that enables us to maximize the benefits to our clients and efficiently employ RBC’s financing capabilities.”
While outsourcing often results in fund managers not receiving the attention and level of services they need, GPS provides a single platform of services and uses a wide-angle view to assess each particular business. This includes capital management, direct marketing, prime brokerage, electronic trading and capital introductions. The strong credit quality and stability of the providers is something that managers are actively seeking.
“While the past few months have seen unprecedented challenges in the brokerage industry, RBC’s strength and stability has been and will remain a source of confidence for our clients, particularly those in alternative investments,” said Jeremy Frommer, head of RBC Global Prime Services.
Global Prime Services Group has seen a vast increase in the number of emerging hedge fund managers that are aligning themselves with the company. Due to the cost efficiency and the simplicity involved in using a full service third party, new managers are capitalizing on the opportunity.
Already a leader in Canada, GPS is expecting substantial growth this year, while aiming to excel side by side with the emerging and existing managers they are working with.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Reuters- Acceleration Capital Group is the latest entry into the capital introduction space, and plans to offer services that give emerging hedge fund managers an edge for growing their businesses. Acceleration Capital was incorporated toward the end of March as a unit of Saratoga Prime Services, a multi-custody introducing broker-dealer platform that clears through Goldman Sachs, Bear Stearns and Interactive Brokers.
"Our view of the industry is that prime brokerage services are extremely necessary but somewhat commoditized, and the pricing and buying of stock is not much different from shop to shop," said Lance Baraker, one of the founders of Saratoga. "But hedge funds are also looking for branding, and it helps to have a global brand name as prime broker partner and on your documents.
