Saturday, 27 December 2014
Last updated 3 days ago
Jul 25 2008 | 12:38pm ET
Has the credit crisis put an end to the heydays of prime brokerage?
A new report from Celent indicates it might have. Unlike the halcyon days when prime brokers would jump through hoops—and offer huge levels of leverage—to nab a hedge fund client and keep it happy, some are now “struggling to cope with the next stages of the credit crisis.”
In an industry where participants are “usually falling over each other to serve their profitable hedge fund clients, [prime brokers] are now playing hardball, sometimes without regard to the creditworthiness or track record of individual firms.”
The new stinginess “has already resulted in the collapse of some funds forced to liquidate assets,” Celent says, and may push hedge funds to seek capital from new sources.
In particular, the report says that hedge funds may go public or issue bonds to raise money.
“The lending squeeze is also likely to fuel the existing trend of larger hedge funds looking to reduce their financing ties with prime brokers by raising permanent capital,” Celent says.
Dec 1 2014 | 10:21am ET
As 2014 winds down, Northern Trust Hedge Fund Services executives took some time to share their outlook on trends facing the industry in 2015. Read more…
Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.