Kohlberg Kravis Roberts’ new initial public offering may inspire other private equity funds to do the same, and that may change the industry as we know it. Meanwhile, hedge funds, especially large ones, need more than one prime broker these days. Finally, two hedge funds are digging deep into their pockets to settle a variety of charges. Read on.

   Stuart Wise, Senior Editor

 

Hedge Funds Look For More Prime Time
Increased demand from the industry and investors is prompting hedge funds to develop relationships with multiple prime brokers, according to research by Paladyne Systems, turning a one-time luxury into a necessity. Multiple prime brokerage relationships, says Paladyne, gives hedge funds the leverage to bargain for lower fees and better service. What’s more, according to the Paladyne report, the demand of institutional investors for greater transparency in prime brokerage fees has “increased the need for second and third prime brokers to manage such fees.” Hedge funds with more than $1 billion AUM have been using multiple prime brokers for some time, according to Global Guardian, but, thanks to “open architecture” technology, even smaller hedge funds are gaining access to primes. Today, Goldman Sachs and Morgan Stanley together hold 60% of the prime brokerage market, but as HFs look for more prime brokers, opportunities are opening up for other large firms such UBS, and even prime brokerage boutiques.

 


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Hedge Fund Daily: Hedge Fund Daily is published Monday-Friday, except on U.S. market holidays. Editorial staff:  Rob Veksler, Stuart Wise and Jonathan Shazar.

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