Sun, Aug 20, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Survey reveals Goldman as largest global prime broker

Tuesday, October 02, 2012
Opalesque Industry Update - Goldman Sachs is the biggest prime broker in the global hedge funds business, both by mandates and by client assets, according to the first-ever global survey of the prime broking market conducted by HedgeFund Intelligence.

The survey, covering an unprecedented amount of more than $1.6 trillion of assets under management – close to 80% of the total industry – provides the biggest and most detailed analysis of the global prime brokerage market ever published.

By mandates, it shows that Morgan Stanley is the second biggest prime broker globally. But by assets, it shows Credit Suisse in second place – boosted by its strength in international markets, and particularly in Europe where it is now by some distance the biggest player. And in third place by assets is JP Morgan – which, like Credit Suisse, got a big boost to its business following the financial crisis of 2008, but more so in the US market.

Following the top four, the next two biggest players globally are two other major European banks – UBS and Deutsche Bank – which are neck and neck in fifth and sixth places.

And rounding out the top 10 biggest players are four other firms that are very closely matched – Citi, Barclays Capital, Bank of America Merrill Lynch and Newedge, with the latter’s strong position boosted overall by its high market share in the managed futures sector (principal clearing brokers for which are also counted for the purposes of the survey).

Just outside the top 10 are BNP Paribas and SEB, the Swedish bank, which has a dominant market share in the Scandinavian region.

Goldman’s overall lead is based largely on its leadership of the market in the Americas, where it has been challenged very strongly since 2008 by JP Morgan – after the latter took over the old Bear Stearns PB business, which had been a big player in the US.

In Europe, until 2008 the market had been heavily dominated by two firms – Morgan Stanley, which was for many years the clear market leader, followed by Goldman Sachs. But, in Europe, it was Credit Suisse that was the biggest beneficiary of the financial crisis in 2008, when many hedge funds suddenly moved to appoint alternative PBs, and the Swiss bank has gone on to extend its lead in Europe during the past two years as well as expand its market share in the US and Asia.

In Asia, the top five firms are very closely matched – with Goldman and Morgan Stanley only slightly ahead of the rest on the basis of business with Asian hedge funds managed from outside the region (managed mainly from the US or the UK). Within the region itself, Deutsche Bank is currently the biggest prime broker for funds managed in Hong Kong (the biggest market in Asia) as well as in Australia in our latest AsiaHedge survey (May 2012).

The survey’s findings are based on the regional surveys conducted by the HedgeFund Intelligence data team, derived from information reported directly from hedge funds across the globe to the database, supplemented by research on new funds plus SEC filings. The numbers for mandates are based on official prime brokers named by the funds, while the numbers for assets are based in most cases on even splits of fund AUMs among the named PBs – unless, as in a minority of cases, the managers stipulated a different split.

Arguably, this methodology flatters certain firms and understates the importance of others – such as Barclays Capital, for instance, which is a big player overall and particularly in fixed income and multi-strategy, but which has concentrated more on building synthetic PB relationships – where there are no official mandates, and hence cannot be reflected in the figures here.

In addition to the regional variations, there are also some significant variations in market share by strategy type – with Morgan Stanley, for instance, still being particularly strong in equities, while JP Morgan and Credit Suisse are stronger in macro, fixed income and multi-strategy, as well as Newedge in managed futures. These variations are revealed in more detail in the annual EuroHedge and AsiaHedge surveys.

Beyond the leading group of firms named, there is also a long list of other firms that provide prime broking services around the world – including some, such as HSBC, which seem to be building market share rapidly this year. The niche players outside the top 12 also feature some that have a focus on certain market segments – such as Fidelity Prime Services in US equities. There are others that also have a regional focus, such as TD Securities, Scotia Capital and RBC Capital Markets in Canada; or Bradesco and Banco Itau in Latin America.

Neil Wilson, managing editor of HedgeFund Intelligence, commented: “Post-2008, and the traumatic demise of Lehman Brothers, the prime broking world has been in a dynamic state of flux – and we expect this to persist as the industry continues to grapple with a number of challenges. It has been a tough time for prime brokers, with the cost of finance rising and hedge funds in general running with less leverage – and hence less balances with the Street. All of which has served to further level the playing field among the top prime brokers, and to create new opportunities for various firms in several niche areas.”

Press release

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Exclusive: Albright Capital puts a value lens on emerging markets[more]

    Bailey McCann, Opalesque New York: Over the past decade, investors have steadily increased investments in emerging markets private funds. Allocations to the cohort have increased from $93 billion in December 2006 to $564 billion in September 2016, according to data from research firm Preqin. Howe

  2. Jasper Capital International joins Hedge Fund Standards Board[more]

    Komfie Manalo, Opalesque Asia: Diversified and systematic investment firm Jasper Capital International has become the second China-based signatory to the Hedge Fund Standards Board (HFSB), an organization that brings hedge fund managers and investors together to set standards for the hedge fund i

  3. FinTech - Danger: Crowdfunding on the wrong platform could force you to go public[more]

    From LinkedIn.com: Some equity crowdfunding platforms are putting startups at serious risk. Working with a platform that doesn't structure your deal appropriately could jeopardize your ability to raise future capital or worse, force you to become a public reporting company. The emergence of eq

  4. David Tepper says we're 'nowhere near an overheated' stock market[more]

    From Marketwatch.com: Billionaire David Tepper thinks comparing this current stock-market environment with the overheated markets of 1999 is "ridiculous." The hedge-fund manager, who runs Appaloosa Management, told CNBC in a phone interview on Tuesday that the market's record run, notwithstanding la

  5. Opalesque Exclusive: Altegris and Artivest partner on distribution for alternative funds suite[more]

    Bailey McCann, Opalesque New York: California-based investment firm Altegris has partnered with New York-based alternative investments platform Artivest on distribution for $1 billion in alternative funds. The partnership also launches Artivest's capabilities to offer alternative solutions to acc