Northern Trust and Merlin Securities have entered into an agreement to provide Merlin prime brokerage clients with access to Northern Trusts global custody and administration services.
The agreement with Northern Trust adds to Merlins existing broker-dealer custody relationship with Goldman Sachs Execution and Clearing and J.P. Morgan Clearing Corp.
Northern Trusts brokerage arm, Northern Trust Securities Inc., already provides prime services for select clients. Peter Cherecwich, Chief Operating Officer for Corporate and Institutional Services at Northern Trust said This agreement is geared towards those clients that want to take advantage of Merlin’s services and technology while still benefiting from the safety and soundness of Northern Trust’s balance sheet.
Speaking to Global Custodian, Cherecwich said Merlin’s focus on the small-to-midsize hedge fund market fills a gap in our hedge fund custody and administration distribution strategy.
Cherecwich also said that Northern Trust is discussing different operating models with some of the larger prime brokers.
After the collapse of Bear Stearns and Lehman Brothers, the prime brokerage market has opened up to some of the smaller firms who are now looking to consolidate their position. FBR Capital Markets has launched a prime brokerage unit in September 2009; Conifer Securities launched in January 2009 and now has around 40 clients.
Jefferies & Co, launched in 2007, has achieved Best in Class rating over the past two years in the Global Custodian Prime Brokerage Survey. Merlin, the oldest of the new breed, launched in 2004 and now has over 300 fund managers on its books.
Cantor Fitzgerald recently announced that it is joining the prime brokerage market, appointing Noel Kimmel as senior managing director to head up the business.
Giles TurnerNews Editor