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Alternative Market Briefing

Collateral management becomes new challenge as more hedge funds use multiple prime brokers

Friday, August 28, 2009

From the Opalesque Team:

Single prime relationships represent a maximum risk, and multi-prime set-ups have been challenged with a renewed need for stringent collateral administration and counterparty monitoring, claim recent studies on the changing hedge fund market.

Consolidations, mergers and acquisitions, and further divestments will be seen among asset management businesses in the second half of 2009 in order to regain back the absolute confidence of hedge fund companies and the rest of the global finance industry, see our recent article M&A down in 2009, hedge fund industry contributed 26% of deals as activity expected to increase.

Managers forced to comply with investor demands

As a further show of strength and drive to clean up their act, asset managers and the rest of financial services industry are slowly but steadily evolving to step up to the increased demands for more transparency and lower systemic risks especially on the OTC derivatives markets.

This was one of the strategic assessments of the Jefferies Putnam Lovell investment banking division of Jefferies & Company, Inc. ("Jefferies"), contained in a 35-page report " Winds of Change" First Half 2009 M&A Activity in the Asset Management, Broker/Dealer and Financial Technology Industries. ......................

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