Prime brokerage opportunities beckon

November 16, 2009 | By Jim Kim

Truth be told, the movement toward multiple prime brokers was underway even before the credit crunch started to take its toll on hedge funds. The attention to the movement, of course, went way up as hedge funds started cratering. These days, small brokerages continue to eye the market, even as the big boys--led by JPMorgan, Goldman Sachs, and Morgan Stanley--renew their marketing efforts, especially with large established funds.

Reuters reports that the likes of Trade Station, FBR Capital Markets, Interactive Brokers and possibly Knight Capital are eying the field. They'll most likely start with smaller hedge funds and possibly start-ups, though they think big funds bent on multiple primes may sign on. Trade Station plans seem roughly typical. It aims to provide execution platforms, clearance and settlement of trades, risk management, portfolio reporting and commission-sharing arrangements to its clients. The ability to integrated with third-party administrators may be an opportunity of sorts.

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