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Laxman Pai, Opalesque Asia: Deloitte risk advisory executives looked at what European hedge fund managers value most in their prime brokers (PB).
Core services and strength of counterparty were most frequently ranked the most important; conversely, technology was only considered the most important factor by one respondent, and fees were not considered the most important factor by any respondent.
Deloitte said in a press release: "We developed a list of six 'headline' factors that could influence a hedge fund manager's choice of PB providers; these were core services, strength of counterparty, fees, franchise, relationship and technology. We asked respondents to rank, on an exclusive basis, the six headline factors from 1 (most important) to 6 (least important)."
Further to this, counterparty risk was the factor most frequently ranked within the three most important factors with core services second most frequently. This demonstrates the criticality of these factors to hedge fund managers in their PB choice.
Despite no respondents ranking fees as the most important factor in PB choice, 20 percent of respondents ranked fees within the top three most important factors.
In discussions, managers indicated fees needed to be within a competitive range rather than negotiating to the absolute lowest level. Managers recognized pressure on PB balance sheets (and hence fees) because of capital requirements and regulation.
In addition many respondents acknowle...................... To view our full article Click here
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