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