Major Prime Brokerage Firms provide a number of services to hedge funds, including clearing and settlement services and technology services. The major prime brokerage firms are also involved in loaning securities and playing an intermediary role between hedge funds and interested investors. These firms are also in charge of managing trade activities on behalf of the client.
The hedge funds are growing in numbers and the value of the assets is also growing. This factor is stimulating the growth of prime brokerage firms. At the same time, all these major prime brokerage firms are trying to be more innovative than the others in order to offer the best services to the clients, because that is the only way to survive in the modern market.
Hedge funds have their own customized needs, and the major prime brokerage firms have their own specialized solutions to offer. Because of this, hedge funds generally deal with a number of prime brokerage firms to get all necessary services. On the other hand, the major prime brokerage firms are trying to develop themselves as multiple service providers for the hedge funds.
The competition among the major prime brokerage firms is causing improved services at low cost. On the other hand, firms are exposed to several risk factors. Prime brokerage firms help hedge funds through loans that are provided against collateral.
There are several cases where the collateral loses its value and the client also fails to provide the difference between the loan and the collateral value. In such cases, the brokerage firms are compelled to face high losses. The operational and reputational risks are also a matter of concern for these firms.
|ABN AMRO||Barclays Capital|
|Calyon Financial||Banco Espirito Santo|
|Bank of America||BNP Paribas|
|Credit Suisse||Bear Stearns|
|Deutsche Bank||CIBC World Markets|
|Fidelity Investments||Morgan Stanley|
|RBS||RBC Capital Markets|
|JPMorganChase||Jefferies & Company|
Last Updated on : 27th June 2013