The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.

Prime brokerage: All change in prime brokerage

Market share expected to be more evenly spread.

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.

One head of prime brokerage at a bank says that the collapse of Lehman Brothers led to the latest surge of movement among prime brokers. Panic ensued when Lehman announced bankruptcy in September and billions of dollars-worth of prime brokerage assets were frozen at the European arm of the bank. Although Lehman was rarely a sole prime broker to hedge funds, and was rather used as add-on for specialist needs in fixed income or enhanced financing, its bankruptcy and freezing of assets caused hedge funds to question all of their prime brokerage relationships. "For a couple of years now, large sophisticated hedge funds have been diversifying their prime brokerage providers but the Lehman debacle really focused people’s minds on where their assets are being held," says the banker.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree