Prime brokers hold their own in trying times

Latest survey shows prime brokers retaining client confidence in their response to pandemic conditions.

By Richard Schwartz

In a second year where Global Custodian’s annual Prime Brokerage Survey was completed under lockdown conditions, results are broadly similar in aggregate to 2020. Interestingly, the overall average across all providers and service categories has risen from 5.33 to 5.88.

As in 2020, the Prime Brokerage Survey asked clients to assess the services that they received from their prime brokers across 14 categories. This was done through a sliding scale from ‘Unacceptable’ to ‘Excellent’. In some categories, a number of optional qualifying questions were posed to add colour as well as an optional comment box per category. The published results use Global Custodian’s conventional seven-point scale familiar to readers of the magazine (where 1=unacceptable and 7=excellent).

One or two categories, notably Client Services and Technology, show an uptick that might be expected as both clients and providers became more comfortable over the year with new ways of working. Others such as Trading and Execution have risen for reasons that are harder to discern.

It is encouraging that in a time of relative turmoil, respondents appear to have a degree of confidence in the Asset Safety provided by their primes, rating this category 6.24 – the highest category average in the survey. Client Services also appear to have adapted to the new abnormal, recording an average of 6.18, up from 5.88 the previous year.

At the other end of the list, we find – not for the first time – Consulting and Capital Introductions. The former may well have been tested more than usual over the past 18 months as funds attempt to navigate their way through an unfamiliar economic and market environment, while the latter often seems to leave clients wanting more, though whether this is because of overpromising on the part of providers or unrealistic expectations on the part of the hedge funds is unclear. Either way, it seems that these are two areas where competitive differentiation might be easier to demonstrate by those providers who have done well in these categories.

Ten responses were the minimum sample number required to assess a service provider sufficiently for their full category results to be published.

Subscribers to Global Custodian can access the full survey here. If you don’t have a subscription to Global Custodian you can purchase the survey by clicking here.