Goldman is top hedge fund broker
GOLDMAN Sachs and Credit Suisse have emerged from the financial crisis as the biggest suppliers of brokerage services to the embattled hedge fund industry, a new study shows.
GOLDMAN Sachs and Credit Suisse have emerged from the financial crisis as the biggest suppliers of brokerage services to the embattled hedge fund industry, a new study showed yesterday.
The inaugural global survey by data group Hedge Fund Intelligence covers more than $1.6trillion of assets — the bulk of the hedge fund industry — and names Goldman as the leading “prime broker” with more than 900 mandates and assets worth $222.6bn. Prime brokers make money from hedge funds by providing services such as stock lending, financing and trade execution.
Credit Suisse is in second place with assets worth $200bn.
The survey gives an insight into a sector which, in some cases, has seen profits plunge as funds rein in their use of debt in investment strategies and brokers themselves face higher financing and regulatory costs.
While a share of business from the biggest traders, for instance Brevan Howard, can deliver tens of millions of dollars in commissions, brokers are finding some clients unprofitable and are sometimes demanding higher fees, a greater share of business or even telling them to look elsewhere.
The survey puts JPMorgan third in the global prime brokerage market with $187bn in assets. Its strength in the US owes much to its purchase of Bear Stearns’ prime broking business and expansion in Europe and Asia.
Morgan Stanley is fourth with $163bn, although it ranks second in terms of number of mandates.
UBS and Deutsche Bank are the other two brokers with more than $100bn in assets, while Citi, Barclays Capital and Bank of America Merrill Lynch are all just under the $60bn mark.
Gathering accurate data on the hedge fund industry is notoriously difficult and the findings of prime broker surveys are sometimes questioned by banks.
Hedge Fund Intelligence said its data was based on information reported by hedge funds, as well as research on new funds and Securities and Exchange Commission filings. Reuters