Wells Fargo Securities, the capital markets and investment banking arm of Wells Fargo, has received approval from the Financial Industry Regulatory Authority (FINRA) for a self-clearing brokerage, as the bank looks to extend its prime brokerage offering.
Previously, Wells Fargo served as an introducing broker, following its acquisition of Merlin Securities two years ago. Now, the bank will offer both the introducing model to smaller and/or emerging managers, while also targeting larger alternative managers with its self-clearing offering.
“We are committed to offering clients the full breadth of resources and solutions that can help them adapt to this evolving landscape,” says Eamon McCooey, head of Wells Fargo Securities’ Prime Services. “By adding our self-clearing capabilities as well as maintaining our introducing broker model, we are taking the next thoughtful step in building out our prime services platform. These new capabilities fit within the strong risk infrastructure run by our experienced compliance and risk team members who ensure all regulatory requirements are met.”
The full prime brokerage platform now includes services such as multi-asset class clearing, margin financing, securities lending and custody, along with technology and capital introduction services.
“By just having the introducing broker model, traditionally when we had a manager that we took from cradle and started to grow and develop that manager, then suddenly they became attractive to the larger prime brokers,” says McCooey. “With the introducing prime brokerage model, that was one of the disadvantages that the client would move onto a larger prime brokerage platform. We feel now that given we have the introducing model, and the focus and priority will still be on that, as well as our self-clearing, they can grow up in the introducing broker platform, and then maybe over time, they can migrate onto our self-clearing platform.”
Going forward, McCooey notes that Wells Fargo is still in the early stages of its prime brokerage platform build-out, and the bank looks to continue to expand the offering. For example, the prime brokerage platform will have additional automation over the next few years, with more straight-through processing.
Editor’s note: Stay tuned for this week’s Friday Interview with Eamon McCooey for more on Wells Fargo’s self-clearing offering and the challenges that prime brokers face in bringing funds onto their balance sheets.
Wells Fargo Expands Prime Brokerage Business With Self-Clearing Platform
Wells Fargo Securities, the capital markets and investment banking arm of Wells Fargo, has received approval from the Financial Industry Regulatory Authority (FINRA) for a self-clearing brokerage, as the bank looks to extend its prime brokerage offering.