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Regulation, in the form of AIFMD and Basel III, has had a profound effect on the way that prime brokers and fund managers view their relationship. Ten years ago, things were simple. Hedge funds and prime brokers alike operated with fewer regulatory constraints, leverage financing was more freely offered to funds of all shapes and sizes. But the environment has become a lot more complex. Banks' balance sheets come under increased pressure and managers face direct regulation under AIFMD, requiring those running EU-based AIFs to appoint a depositary.
"Last year, one of the biggest impacts of AIFMD was that it
There's no question that regulation is causing prime brokers to reassess, and, where necessary, evolve their business model. Much is made of the fact that prime brokers are ruthlessly culling hedge funds, banishing them to hinterland. Hedge funds that aren't generating revenues for their primes have become the vampires of high finance, sucking the lifeblood out of banks' balance sheets.
Speak to any prime broker and the stock response is: `We need to improve our return on assets'.
This is completely understandable; necessary even. But it is equally incumbent upon hedge funds to assess, and, if necessary, cull their prime
As the industry watches the growth of liquid alternatives among institutional and individual investors, fund managers are also looking ahead. The retirement market may be the next frontier. It represents a large and growing pool of assets driven by the importance of retirement savings across multiple investment segments.
How is growth in the retirement space opening the door to liquid alternative strategies? This Q&A with Pershing's subject matter experts Mark Aldoroty (pictured) and Rob Cirrotti will help fund managers understand what to consider when looking to the defined contribution (DC) plan space as a growth opportunity. There continues to be
By Jerry Lees (pictured), Linear Investments – A quasi-revolution is happening in prime brokerage. Post-2008, bulge bracket banks were non-discriminatory in the type of hedge fund business they onboarded as managers and their end investors sought to minimise counterparty risks post-Lehman Brothers by opening up accounts with multiple prime brokers. Today, the landscape is vastly different.
Basel III is having a profound impact on bulge bracket banks and their prime brokerage operations. The rules force banks to adhere to Liquidity Coverage Ratios (LCRs) which require them to hold onto sufficient High Quality Liquid Assets (HQLA) to manage down a 30-day market
Pre-2008, Prime Brokerage was a land grabbing exercise. Balance sheet was put to work, free of the shackles of regulation, and hedge funds of all shapes and sizes were welcome. That model has now changed under Basel III. And whilst US banks were quick to recapitalise following the financial crash, European banks have taken longer to assess their balance sheets. Many are now taking steps to restructure as a result.
"In the post-2010 era, it has become a much clearer regulatory environment and a much tougher capital situation, particularly for European banks. I think US banks, with liquidity stress testing
Earlier this year, Concept Capital Markets LLC was acquired by Cowen Group, Inc. ("Cowen"), a US investment bank and alternative investment manager with a heritage dating back to 1918. The transaction was completed 1st September and thanks to the significant financial resources that Cowen has at its disposal, the newly named 'Cowen Prime Services' division is now in a strong position to move quickly and build out its market share; with Europe a key focus of attention.
"We believe that there is a real opportunity for Cowen Prime Services to enter the European market and be successful," comments Mike Rosen
US prime brokers are stealing a march on their European peers as European banks grapple with the demands of shoring up their balance sheets to comply with Basel III rules. As Reuters reported 7th October 2015, Goldman Sachs and Morgan Stanley have a 37 per cent market share, up 6 per cent from the end of 2014 (according to data from Preqin). Goldman was servicing 2,240 hedge funds through May 2015, followed by Morgan Stanley with 1,693. JP Morgan rounds out the top three with 1,462 hedge funds.
Credit Suisse Prime Fund Services is the highest ranked European PB, with
in association with HRH The Duke of Cambridge’s ongoing patronage of non-profit organisation’s philanthropic initiatives.
SkillForce is a national education and veterans charity dedicated to helping young people flourish through motivational mentoring and education programmes for five- to nineteen-year-olds. Their mission is to help young people develop the skills they need to succeed in education, work and life, drawing upon the military experience and values of ex-services personnel.
100WHF has a strong track record of supporting charities and has raised more than USD38 million (gross total) for philanthropic causes in the areas of women’s and family health, education and
The hedge fund industry produced an aggregate return of -0.26 per cent in November, bringing YTD returns deeper into negative territory for 2015, -1.21 per cent, according to eVestment’s latest hedge fund performance review.
The industry’s last annual decline was 2011 when average returns were -4.99 per cent and the S&P rose +.11 per cent.
Despite overall industry returns being negative in 2015, the distribution of returns across funds is very slightly in favour of positive performance (50.2 per cent positive, 49.8 per cent negative). The average positive return is 7.28 per cent and the average negative return is
Taurus Administration Services has acquired Pacific Fund Systems’ PFS-PAXUS integrated share registry/fund accounting platform to support a push into the European market, which it expects to grow as a result of the Alternative Investment Fund Managers Directive.
Taurus will target start-up and sub-USD100 million funds often regarded as being too small by the larger fund administrators. Taurus has been appointed administrator to three alternative investment funds and has seen its assets under administration grow over the last two years from USD80 million to USD192 million in 11 funds. It has offices in Madrid, Geneva and the Cayman Islands and is
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