Interdealer broker Tullett Prebon has launched a new transaction settlement and escrow service for the secondary hedge fund market aimed at reducing the risk of buying and selling hedge fund investment stakes.
“The secondary hedge fund market has been around for several years, but many institutional clients have been hesitant to utilize this market, in large part due to transaction settlement and transfer risks through the traditional OTC trade clearing process, which typically involves multiple counter-parties,” said Neil Campbell, head of alternative investments in London for Tullett Prebon.
“The solution we’ve developed strips away those layers to reduce transactional and transfer risks to offer peace of mind to our existing clients and to attract new counterparties to the market and increased liquidity,” Campbell said. “We are extremely pleased to be partnering with industry veteran, KAS BANK, who is highly respected for its expertise, risk management and transparency in securities services.”
The firm is offering the service in conjunction with KAS BANK, an independent European specialist in securities services, which will act as an independent administrator for Tullett Prebon’s institutional client transactions.
Requirements for utilization of the service are a signed escrow agreement between KAS BANK, the buyer and the seller; and an escrow account to be opened at KAS BANK by the buyer.
Tullett Prebon’s alternative investments team provides institutional investors with the opportunity to buy and sell secondary interests in hedge funds and private equity funds. Tullett Prebon became the first established brokerage to enter the secondary hedge fund market, by establishing its U.K. Alternative Investments desk in London in February of this year. The firm recently launched its U.S. alternative investments desk in New York.