Technology a Revenue Driver for Prime Brokers, Says Report

A new report from Finadium and Sungard stresses the importance of technology, client service and transparent communication between prime brokers and hedge fund clients.

The report lists five trends in how prime brokerages are approaching client service:

– Hedge funds are starting to see prime brokers as potentially vulnerable counterparties;

– Prime brokers must allocate technology and services smartly to balance client loyalty with client independence;

– Prime brokers must provide strong operational support without enforcing exclusive relationships;

– Consulting services, legal and technology, are becoming an important differentiator; and

– Increased transparency and reporting are increasingly necessary in communication. In particular, equity-focused hedge funds are seeking more access to real-time stock loan data.

“A key challenge for prime brokers today is to understand how best to interact with their hedge fund clients, particularly around technology and services. The right technology can become a revenue driver while the wrong technology may result in client frustration and losses,” said Josh Galper, Managing Principal, Finadium.

The full report is available here.