Since the financial crisis, the relationship between prime brokers and their hedge fund clients has changed significantly. A multi-prime approach has become the norm in the fund management industry to spread risk. In the prime brokerage market, competitive
advantage and differentiation from other brokers is important. As such, it is essential that prime brokers can demonstrate to their clients improved transparency of operational processes as well as providing services which can help clients’ business growth
into new asset classes and markets.
As multi-asset functionality becomes increasingly important, prime brokers also need to extend their services, expanding the number of products they can offer and their geographical reach. This is where an effective, consolidated technology platform becomes
essential. Prime brokers should think now about their IT infrastructure and whether it ensures both operational efficiency and transparency in reporting, as well as providing value added services for clients.
Key things to consider in technology platforms:
· A multi-asset platform is essential for prime brokers supporting clients moving into new asset classes. A single consolidated platform can remove complexities and enable operational savings
· Boosting transparency is a key factor for hedge funds looking to prime brokers for services. Being able to support clients with real-time updates on positions is a must for brokers, as is real-time settlement status updates
· With a multitude of prime brokers in the market place, hedge funds have their pick of services and as such it’s beneficial for prime brokers to champion operational efficiency as a key competitive advantage
· Technology that integrates with legacy systems is a good way to increase quality of service whilst still using existing infrastructures
· Reporting capabilities which support transparency and aggregate data from other outlets is beneficial - clients then gain a unified and clear overview of positions