New powers in prime brokerage

At the nadir of the credit crunch, the conventional wisdom was that the prime brokerage business was going to fade. Most assumed that Goldman Sachs and Morgan Stanley, as bank holding companies, were no longer structured to support the business. Bear Stearns another big prime broker disappeared into the folds of JPMorgan Chase.

The business has certainly not gone away, but the collapse of Lehman Brothers, notes Breakingviews, ended up being so traumatic that a new order was ushered in. Afraid of another huge collapse, hedge funds diversified more--a trend already underway--afraid of having too much of their money with big brokerages. The result is that the once-tight grip that Goldman Sachs and Morgan Stanley had on the top spots has been weakened. New winners include JPMorgan Chase, Deutsche Bank and Barclays. It is still huge business on Wall Street. 

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