One aspect of the prime brokerage model that is emerging in parallel with technology advancement is greater agility and responsiveness to clients' needs. At traditional bank-owned prime brokers, regulatory reform is weighing on them and creating a degree of inertia, causing them to overlook their small and mid-sized hedge fund clients.  This is something that is playing straight into the hands of Sydney-based Invast Global, a subsidiary of Japanese listed Invast Securities Co Ltd. Employing a prime-of-prime model, Invast leads the industry in the provision of multi-asset high-quality, non-bank Prime Services. It provides credit intermediation, access to liquidity (both OTC

"There is a clear message coming out of the marketplace that we are responding to. The smaller and medium-sized managers are being squeezed out of the tier one primes and have nowhere to go," states Jerry Lees, Chairman of Linear Investments. "There is a momentum in the marketplace forcing change. The impact of Basel III on banks' balance sheets means they cannot afford the infrastructure costs to continue supporting smaller hedge funds and this has created a gap." This means small to mid-sized hedge funds are finding it harder to establish a strong prime brokerage relationship.  This is good news

The notion of what it means to be a prime broker is changing. Hedge funders are looking for solutions that go beyond the usual services such as trade execution and clearing, capital introduction, securities lending and margin finance. These solutions extend to middle- and back-office support, compliance support and outsourced trading services. With respect to the latter, this is something that Cowen Prime Services are seeing significant interest in, not just among emerging managers wishing to reduce infrastructure spend but seasoned managers with an eye on improving business efficiency. "What is becoming more evident to us is that hedge funds

The prime brokerage landscape is changing. The largest names still dominate in terms of market share, with Goldman Sachs and Morgan Stanley at the vanguard. But in a year when the established order has been overturned – think Brexit and the Trump election victory – the large investment bank-owned primes cannot afford to rest on their laurels.  This is because the nature of hedge fund managers is changing. Those spinning out of existing hedge fund groups and setting up their own funds are largely millennials who have grown up with the Internet and who bring a different mindset to the industry.

Apex is a proven leader in the clearing space and, having built a suite of sophisticated technology solutions over the years, has become the 'go-to' clearing firm for fintech firms. Indeed, it is currently the Custodian-of-Choice for tech-savvy firms like Betterment, Stash, Wealthfront and other robo advisors.  This year, to move beyond merely providing custody and clearing to retail clients (online brokerages and RIAs as well as fintech firms), Apex made the jump to provide prime brokerage services to the institutional community. This September, it launched a full-fledged prime brokerage solution and has already onboarded nearly 20 hedge fund clients. 

Poor hedge fund performance over the past 18 months means that managers face continued fee pressure from investors. As a result, smaller and emerging hedge funds are becoming increasingly attracted to non-conventional prime brokers that are able to offer automated solutions for risk management, account management, trade execution and pricing.  Leading the pack is Interactive Brokers, which has been built on three pillars: low cost, breadth of product (globally) and best-of-breed technology and trading tools.  "These things are becoming much more important as the hedge fund industry becomes more competitive," says Steve Sanders (pictured), EVP, Marketing and Product Development. "What

One of the unintended consequences of market regulation is that it has, to some extent, leveled the playing field. In what was once a fiercely competitive environment dominated by bank-owned prime brokers, in recent years a slew of new entrants has emerged, offering different service models for managers to consider.  Indeed, in early December, ING Capital Markets LLC were the latest to say that they were expanding into PB with the launch of a synthetic prime brokerage platform to provide global, cross-asset portfolio swap products. "We offer the flexibility of a multi-asset portfolio swap which is operationally efficient, streamlined and