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From Kirsten Bischoff, Opalesque New York: U.S.-based Conifer Securities has announced their launch into prime brokerage services, taking aim at those funds hit by the downsizing of prime broker clientele at larger investment banks and a growing trend in small and mid-sized funds to diversify their prime brokerage counterparty risk. The migration trends in the prime brokerage space cover two distinct areas as risk management initiatives sweep through the industry.

“The trend we have seen over the past six months is that the prime brokers are looking at their client list and squeezing the tail to focus on the larger and more profitable clients.” Conifer President and CEO Jack McDonald told Opalesque. “This, coupled with the trend towards counterparty diversification has resulted in a real migration of counterparties.”

The importance of counterparty diversification as an idea gathered steam after the collapse of Bear Stearns, but did not shake the industry until the beginning of October which saw 1,000 hedge funds (which is one out of eight funds industry-wide) scrambling to find prime brokerage services as Lehman collapsed. “Whereas in the past assets might have had to reach $400-$500mto justify multiple prime relationships, today that threshold is much lower. We are seeing $50m-$100m funds looking for dual prime brokers.”

“There is an element of prime brokerage that we have been providing clients already thro......................

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