US Prime Brokerage

US Prime Brokerage Commentary

I recently commented about how unwise it was to only have one prime broker and separately about how concerns were starting to focus on Morgan Stanley and Goldman, something that would have until this weekend seemed laughable.

Well, it appears that prime brokerage clients of Morgan Stanley and Goldman have started getting jitters, to the delight of other prime brokers with banking parentage. With Lehman Administrators confirming that there would be no early return of Prime Broking client assets, hedge funds are starting to look at migrating some of their business.

Until now, Goldman and Morgan Stanley were the prime brokers firms wanted to be with. They dominated the prime broking market and had their choice of which clients to accept. For most firms, an account with GS or MS was a seal of approval that they could show to investors, since those brokers didn't accept "dodgy" accounts. Read more here...

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