The expansion in the hedge fund industry spells opportunity – but also increased competition – for prime brokers. Previewing the results of new research conducted among hedge fund managers, Sandra Williams, principal conultant at TCA Consulting, says new entrants to the prime brokerage market need to differentiate their services, while existing players must act to improve efficiency and upgrade their offerings.
TCA Consulting personally interviewed four prime brokers and polled 24 hedge funds in the US and Europe to discover how the market for support services is evolving, and how prime brokers can best serve the changing needs of hedge fund clients.
The findings suggest that prime brokers must do the following to attract and retain clients:
• Continue to invest in securities lending books and in relationship building;
• Make reporting more comprehensive, flexible and accurate;
• Improve the corporate action information they provide;
• Increase straight-through processing; and
• Extend risk-measurement tools beyond mainstream markets and products.
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