In just six months the make-up of the prime brokerage market has completely changed. Previously dominated by Goldman Sachs, Morgan Stanley and Bear Stearns, the industry looks set to be led more evenly by about six key players, with hedge funds dividing assets among them rather than having a core prime broker.
Nervousness about the future of the independent investment banking model caused many hedge fund clients to reduce their exposure to Goldman Sachs and Morgan Stanley in September, say staff at other prime brokers.
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