Japanese brokerage Mizuho Securities has decided to call time on its Singapore prime brokerage business reported Reuters this wee
Japanese brokerage Mizuho Securities has decided to call time on its Singapore prime brokerage business reported Reuters this week. In documents obtained by the news agency it appears that worries of bleeding further capital prompted the decision, having reported pre-tax losses for the last financial year of USD15.6million. Most of the losses (USD13.7million) stem from its prime brokerage unit which made zero profit for the period. The firm wanted to compete with more established global players, creating a high frequency trading platform to cater for hedge funds, but it hasn’t worked out. Not only because the technology infrastructure was insufficient but also because of Singapore’s conservative corporate culture. “Without offering extremely low fees it is difficult to bring in large, ultra-high frequency customers,” Mizuho reportedly wrote. Since beginning operations there in 2008, some USD50million was spent developing its algorithmic trading technology and hiring staff. Outstanding IT costs are estimated to be USD3.4million according to the document. The brokerage plans to shoulder these losses to avoid breaching capital adequacy rules. “Cumulative losses at the PS (prime services) business have eroded the financial base at MHSS (Mizuho Securities Singapore),” wrote Mizuho Securities. The decision to shut its prime brokerage business means that 13 staff are being laid off.