HSBC Aims To Boost Prime Brokerage Business

Sep 4 2009 | 2:02am ET

When Lehman Brothers collapsed, many hedge funds moved their money from prime brokers to the supposedly safer waters of an HSBC Holdings account. Now, that bank is aiming to consolidate and expand its new roles as a broker to hedge funds.

“It’s a significant opportunity for a new revenue stream,” Stuart Gulliver, who heads investment banking at HSBC, said at a London conference. “We’ve seen a number of hedge funds moving their accounts to HSBC because their main concern is getting their money back.”

Gulliver is referring to the limbo some 700 Lehman Brothers prime brokerage clients find themselves in following the Wall Street bank’s collapse. Some $11 billion in hedge fund assets remain frozen as part of the bankruptcy proceedings for Lehman’s London arm.

“We can give people leverage in a segregated account, so they don’t have the operational risk that came out when Lehman Brothers failed,” Gulliver said.

Earlier this summer, HSBC set up a 50-strong prime services division. The bank’s prime brokerage will, as Gulliver said, use segregated accounts to avoid a Lehman-style freeze, but will also offer less leverage than hedge funds got used to in the salad days before the subprime mortgage crisis.


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this race. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.