An asset class rotation among hedge funds could encourage prime brokers to invest significantly in specialising in servicing credit and multi-asset strategies.
Equities and fixed income financing rose in the first quarter at Goldman Sachs, as hedge funds increase balances.
The Singapore-based bank will combine and align its custody and post-trade operations with the portfolio risk management and prime finance businesses.
Prime brokers are now stepping up their due diligence of hedge funds, becoming more forensic when looking to bring a hedge fund onto their balance sheet.
Hedge funds are concerned a potential cap on synthetic leverage could cause several problems for certain strategies.