Fresh thinking from Fidelity

Wed Oct 1, 2003

One of the more intriguing developments of the summer, with potentially far reaching implications, was the emergence of Fidelity as a bidder in the battle to buy ABN AMRO's prime brokerage business. In the end Fidelity dropped out, leaving the way open for UBS to buy the business for $250 million. But the fact that Fidelity was involved at all signals a potential seismic change in the prime brokerage business.

It suggests that prime brokerage may not remain the cosy preserve of investment banks for much longer. Many different types of financial institution seem to have an interest in shaking up what they see as easy profits and a captive market that the investment banks have carved out for themselves.

State Street almost started the assault earlier this year. They assembled a prime brokerage team, but pulled the plug on the operation a week after launch. Fidelity may already have...

ISSN: 2151-1845 / CDC10004H

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