Sectors

Rapid rush back to prime broking prompts warning

Date: 28 Jan 2010

The revival of Asia’s hedge fund industry has boosted the fortunes of prime brokers. But market participants say the rapid rush to expand in this area might backfire, given that the speed of recovery remains uncertain.

Keywords (click to search): [prime broking] [hedge funds] [Deborah Lee] [Kirby Daley] [Newedge]

Pamela Tang
The revival of Asia’s hedge funds industry is boosting the fortunes of prime brokers, although there are concerns that there isn’t enough business to go around.

The Asian hedge fund industry suffered badly during the financial crisis from large losses and a wave of redemptions. That led to the closure of about 310 funds in 2008 and 2009.

Meanwhile, investment banks have been forced to curtail their prime brokerage businesses, having grown less willing to commit capital because of the increased risk of lending to hedge funds.

Unexpectedly, asset markets revived quickly last year and...

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