More prime brokerage firms are adding on administration services to help attract and retain clients. I wasn’t sure how widespread of a trend this was but saw this mentioned within an article yesterday as noted below.
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In recent years, the custodian banks that have acquired hedge fund administrators have sought to adjust client lists in favor of larger and more profitable hedge fund and fund of funds groups interested in a broader array of services. At the same time, prime brokers have recognized that providing administration services can help attract and retain clients and counter the shift among hedge fund managers towards multiple prime brokerage.

“It would be surprising if the hedge fund administration industry continues to support such a large number of providers, and there is now evidence that a renewed round of consolidation is in the offing,” says Dominic Hobson. “However, the appetite to sell may be offset as well as encouraged by the depressed prices available. In any event, the buyers are likely to be different from the banks which dominated the acquisition process in the early years of this century.” Read more…

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Here is an interesting article about the growth of prime brokerage services in Asia. I didn’t know that growth was so strong for these groups right now…

Citigroup expects the amount of assets serviced by its Asia Pacific prime brokerage arm to grow by more than 30 percent annually over the next three to five years, as more global hedge funds set up shop in the region.

Even with tumbling stock markets hammering Asia’s hedge fund industry, many large international managers are doing more business in the region, drawn by its long-term potential, said Hannah Goodwin, head of Prime Finance, Asia Pacific for the U.S. banking giant.

“We’re looking at a 30 to 50 percent growth every year,” she told Reuters in an interview. “That’s how aggressive we want to be with this business and how well we think this business is going to develop for us.” Read more…

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Tags: Prime Brokerage in Asia, Asian Prime Broker, Singapore, Hong Kong, Beijing, Shanghai, China, Japan, Tokyo, Asia Prime Brokerage Services

Here is an interesting article about the growth of prime brokerage services in Asia. I didn’t know that growth was so strong for these groups right now…

Citigroup expects the amount of assets serviced by its Asia Pacific prime brokerage arm to grow by more than 30 percent annually over the next three to five years, as more global hedge funds set up shop in the region.

Even with tumbling stock markets hammering Asia’s hedge fund industry, many large international managers are doing more business in the region, drawn by its long-term potential, said Hannah Goodwin, head of Prime Finance, Asia Pacific for the U.S. banking giant.

“We’re looking at a 30 to 50 percent growth every year,” she told Reuters in an interview. “That’s how aggressive we want to be with this business and how well we think this business is going to develop for us.” Read more…

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Tags: Prime Brokerage in Asia, Asian Prime Broker, Singapore, Hong Kong, Beijing, Shanghai, China, Japan, Tokyo, Asia Prime Brokerage Services

Below are a series of resources related to Morgan Stanley’s Prime Brokerage business source

Resource #1: (7.5.09) What are Morgan Stanley’s intentions in the prime brokerage model? Well, fairly or not, the perception has developed as of late that it was seeking a new business model that relied less on leverage and anything seen as risky. Many assumed it wanted to ratchet back in prime brokerage, after having long ruled the roost with Goldman Sachs, but that may not be true. source

Resource #2 (5.22.09) Morgan Stanley replaced its top prime-brokerage official, underscoring big changes in the way investment banks are serving hedge-fund clients.

Stuart Hendel, who managed the New York firm’s prime-brokerage business since 2007, “has decided to leave the firm to pursue outside interests,” according to an internal memo released by Morgan Stanley on Thursday.

Mr. Hendel is being succeeded by Alex Ehrlich, who had been global head of prime services at UBS AG for the past six years. source

Resource #3: (4.3.09) U.S. prime brokerage business, Patrick Mortimer, resigned this week, The Wall Street Journal reported Wednesday. Mortimer left for personal reasons and no direct replacement is planned, according to the newspaper, which sourced people familiar with the matter

Resource #4: (11.17.08) Kurt Baker, the head of Morgan Stanley’s (MS) prime brokerage in Asia, is leaving the firm, a company spokesman confirmed Wednesday, but declined to comment further.
Baker’s departure comes a week after Morgan Stanley confirmed additional worldwide job cuts. It said it would reduce 10% of its staff in institutional securities, which includes prime brokerage, as well as 9% in asset management, which manages mutual funds and other investment instruments.

The firm has already cut about 10% of its work force this year. Since June 2007, the bank has cut around 4,500 employees, bringing its total staff to about 46,500 as of Aug. 31, 2008.
Morgan Stanley’s prime brokerage, one of the two largest in the Asia, has been hurt by a worldwide hedge-fund slump.

The hedge-fund industry has been struggling against trailing performance and a rising tide of redemptions. In Asia, the hedge-fund industry has been especially vulnerable to a focus on stocks and a tendency to go long. The Eurekahedge Asian Hedge Fund Index is down 21.6% so far this year.

Morgan Stanley’s prime brokerage operations, in particular, were hit after Lehman Brothers Holdings Inc. filed for bankruptcy protection in mid-September. Concerns about the stability of investment banks caused some hedge-fund clients to move assets. Source
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Resource #5: Stu Hendel will rejoin the Firm as Global Head of Prime Brokerage. He will be based in New York and report to Rich Portogallo, Head of the U.S. Equity Division and Global Equity Financing Services.

In this role, Mr. Hendel, 48, will oversee the Firm’s global prime brokerage business focusing on growing Morgan Stanley’s market leading franchise and meeting the evolving needs of clients. Mr. Hendel will also work closely with senior management in the Equities and Fixed Income divisions on defining and executing strategic direction for the group.

“We are delighted that Stu Hendel has chosen to return to Morgan Stanley,” said Jerker Johansson, Global Head of Equities and Co-Head of Institutional Sales and Trading at Morgan Stanley. “Stu had been instrumental in helping to build our prime brokerage business into the recognized market leader today. His experience and skill make him perfectly suited to continue our momentum in this business.”

Mr. Hendel rejoins Morgan Stanley from Eton Park, where he served as the Chief Operating Officer since that firm was organized in 2004.

“Stu’s innovation, content, passion and recent experience at one of the world’s most respected alternative investment firms will only further serve to reinforce our commitment to our clients and our staff,” said Rich Portogallo. “We are thrilled to have him back.”

Prior to joining Eton Park, Mr. Hendel spent 15 years at Morgan Stanley. He held a number of senior management positions in Prime Brokerage from 1993 to 2004, most recently serving as Co-Head of U.S. Prime Brokerage. Prior to that, Mr. Hendel worked in the legal division of Morgan Stanley from 1989 to 1993. Mr. Hendel received his J.D. from Cornell Law School 1983 where he served as business manager of the Law Review. He graduated from Wesleyan University in 1980. Mr. Hendel will rejoin Morgan Stanley in early 2007.

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I recently read a short article about the prime brokerage business in Asia through FinAlternative’s prime brokerage survey. While many local markets have been recently hurt performance-wise Asia has a vastly expanding hedge fund industry, and prime brokerages are bolstering their capacity in Asia by buying up talented executives from the top firms.

Major firms like Merrill Lynch and Morgan Stanley have struggled to retain their top executives in Asia from rival prime brokerages. Goldman Sachs now claims five managing directors of its Asian prime brokerage division, and has plans to have another series of major hiring. Asia, being the fastest growing hedge funds market, has become more and more important for successful prime brokerages.

A growing number of Hedge Fund Group (HFG) members have been expressing an interest in learning more about hedge funds in Asia, hedge fund jobs in Asia and ways to seek exposure to new investor markets within that region of the world. If you have any white papers or PowerPoints on this topic and don’t mind sharing them please send them over. Thanks in advance.

- Richard

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Prime Brokerage Asia

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2. Prime Brokerage Services
3. Prime Broker Definition
4. Hedge Fund Jobs
5. Hedge Fund Managers
6. Capital Introduction
7. Hedge Fund Administrators
8. Hedge Fund Videos
9. Prime Brokerage Video
10. Hedge Fund Careers

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Prime Brokerage Sales

Prime Brokerage Sales Trend

While the credit crisis has hurt most financial firms, some boutique prime brokers have benefited. As hedge funds look out for their best interest, smaller prime brokerage shops are becoming more attractive than the largest firms. As major brokers reduce their less-profitable hedge fund accounts, boutique primes take on these clients. Another opportunity for boutiques is that the big firms are cutting back on staff, making it easy to attract seasoned talent to join the smaller firms. Many of these veterans bring some clients with them too.

The credit crisis has in many ways helped boutique prime brokers, but it has also hurt their capital introduction capabilities. A recent FINalternatives survey revealed that over a third of all hedge funds rated their prime broker’s capital capabilities as “poor”. But the survey also showed that nearly 75% of hedge fund managers that called their prime broker’s personal service “poor” are shopping for a new one. Many average-size funds are not given the attention from big firms that the smaller prime brokers promise; and as long as this neglect continues, boutique prime brokers will thrive.

- Richard

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8. Hedge Fund Performance
9. Hedge Fund Employment
10. Hedge Fund Strategy

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What is Prime Brokerage?

Prime Brokerage Video Explanation

Here is a short video explaining what prime brokerage is, why it is important and how hedge funds rely on prime brokers to conduct day-to-day trading and reporting.

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• Capital introduction services are in higher demand than ever
• The strongest prime brokerage teams aren’t always the most well known or largest in size as they have problems serving all of their clients well
• Service is still a competitive advantage for many prime brokerage firms who are used to working with clients tired of the large prime shops not giving them any service

If you are looking for prime brokerage contacts in Chicago please email Richard@HedgeFundGroup.org.

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The following is a list of hedge fund prime brokers:

TradeStation Prime Services: Advanced technology and a multi-custodian offering gives TradeStation the ability to serve clients as both start-ups and as larger, well established funds. Launching and running a fund is challenging and TradeStation offers the framework of practical knowledge that evolves with your business. TradeStation Prime Services: technology,vision and service. Learn more at http://TradeStationPrime.com

Contact:

Lance Baraker, Senior Managing Director at LBaraker@tradestationprime.com or by calling (917) 273-4185 (New York Office)

William Katts, Senior Managing Director at WKatts@tradestationprime.com or by calling (203) 685-20145 (New York Office)

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Best Prime Broker

Top 12 Tips for Choosing a Prime Broker

Quick Link: List of Hedge Fund Prime Brokers

Prime brokers offer a group of services to hedge funds that include lending securities, financing leverage, cash management and more.

Who is the best prime broker? I have gotten that question a few times and never really know how to answer without knowing much about the hedge fund they run.

I thought these tips might help those looking for the “best” prime brokerage firm for their hedge fund business. If you haven’t already seen it I have also recently created a list of prime brokerage services to explain what a prime broker does.

Here are the 12 tips summarized from a PDF by Richard Lindsey on choosing a prime broker.

1. Choose an experienced, proven prime broker who knows what you do
2. Choose a prime broker who realizes the risks of your strategy, and understands its own exposure
3. Choose a prime broker who promises to introduce you to investors, not to Raise Capital
4. Choose a prime broker who is capable of providing various ways to leverage
5. Choose a prime broker with a strong global securities lending presence
6. Choose a prime broker who offers multiple ways to trade
7. Choose a prime broker who has extensive product capability
8. Choose a prime broker who has a demonstrated technological capabilities
9. Choose a prime broker who can manage cash holdings
10. Choose a prime broker who has a strong and experienced operations office
11. Choose a primer broker who has a experienced and knowledgeable customer service staff
12. Choose a primer broker who is dedicated to the prime brokerage services business.

- Richard

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