London, 27 September 2012 - Goldman
Sachs is the biggest prime broker in the global hedge funds
business, both by mandates and by client assets, according
to the first-ever global survey of the prime broking market
conducted by HedgeFund Intelligence.
The survey, covering an unprecedented amount of more than
$1.6 trillion of assets under management – close
to 80% of the total industry – provides the
biggest and most detailed analysis of the global prime
brokerage market ever published.
By mandates, it shows that Morgan Stanley is the second
biggest prime broker globally. But by assets, it shows
Credit Suisse in second place – boosted by its
strength in international markets, and particularly in
Europe where it is now by some distance the biggest player.
And in third place by assets is JP Morgan – which,
like Credit Suisse, got a big boost to its business
following the financial crisis of 2008, but more so in the
Following the top four, the next two biggest players
globally are two other major European banks – UBS
and Deutsche Bank – which are neck and neck in
fifth and sixth places.
And rounding out the top 10 biggest players are four other
firms that are very closely matched – Citi,
Barclays Capital, Bank of America Merrill Lynch and
Newedge, with the latter’s strong position
boosted overall by its high market share in the managed
futures sector (principal clearing brokers for which are
also counted for the purposes of the survey).
Just outside the top 10 are BNP Paribas and SEB, the
Swedish bank, which has a dominant market share in the
Goldman’s overall lead is based largely on its
leadership of the market in the Americas, where it has been
challenged very strongly since 2008 by JP Morgan –
after the latter took over the old Bear Stearns PB
business, which had been a big player in the US.
In Europe, until 2008 the market had been heavily dominated
by two firms – Morgan Stanley, which was for many
years the clear market leader, followed by Goldman Sachs.
But, in Europe, it was Credit Suisse that was the biggest
beneficiary of the financial crisis in 2008, when many
hedge funds suddenly moved to appoint alternative PBs, and
the Swiss bank has gone on to extend its lead in Europe
during the past two years as well as expand its market
share in the US and Asia.
In Asia, the top five firms are very closely matched
– with Goldman and Morgan Stanley only slightly
ahead of the rest on the basis of business with Asian hedge
funds managed from outside the region (managed mainly from
the US or the UK). Within the region itself, Deutsche Bank
is currently the biggest prime broker for funds managed in
Hong Kong (the biggest market in Asia) as well as in
Australia in our
latest AsiaHedge survey (May 2012)
The survey’s findings are based on the
regional surveys conducted by the HedgeFund Intelligence
data team, derived from information reported directly from
hedge funds across the globe to the database, supplemented
by research on new funds plus SEC filings. The numbers for
mandates are based on official prime brokers named by the
funds, while the numbers for assets are based in most cases
on even splits of fund AUMs among the named PBs –
unless, as in a minority of cases, the managers stipulated
a different split.
Arguably, this methodology flatters certain firms and
understates the importance of others – such as
Barclays Capital, for instance, which is a big player
overall and particularly in fixed income and
multi-strategy, but which has concentrated more on building
synthetic PB relationships – where there are no
official mandates, and hence cannot be reflected in the
In addition to the regional variations, there are also some
significant variations in market share by strategy type
– with Morgan Stanley, for instance, still being
particularly strong in equities, while JP Morgan and Credit
Suisse are stronger in macro, fixed income and
multi-strategy, as well as Newedge in managed futures.
These variations are revealed in more detail in the annual
EuroHedge and AsiaHedge surveys.
Beyond the leading group of firms named, there is also a
long list of other firms that provide prime broking
services around the world – including some, such
as HSBC, which seem to be building market share rapidly
this year. The niche players outside the top 12 also
feature some that have a focus on certain market segments
– such as Fidelity Prime Services in US equities.
There are others that also have a regional focus, such as
TD Securities, Scotia Capital and RBC Capital Markets in
Canada; or Bradesco and Banco Itau in Latin America.
Neil Wilson, managing editor of HedgeFund Intelligence,
commented: "Post-2008, and the traumatic demise of Lehman
Brothers, the prime broking world has been in a dynamic
state of flux – and we expect this to persist as
the industry continues to grapple with a number of
challenges. It has been a tough time for prime brokers,
with the cost of finance rising and hedge funds in general
running with less leverage – and hence less
balances with the Street. All of which has served to
further level the playing field among the top prime
brokers, and to create new opportunities for various firms
in several niche areas."
About HedgeFund Intelligence:
HedgeFund Intelligence is the leading provider of news,
analysis and performance data on the global hedge fund
industry. The company provides dedicated information on
US, European, Asian and African single-manager hedge
funds as well as on hedge fund investors worldwide.
For more information, please contact:
Del Jones / Toby Bates, Merlin PR