ISF Awards Evening
Tonight sees the ISF awards event rolling around again. In my blog last year I commented:
“I think next year’s results will be more interesting than this year’s based on the timing of the survey responses.” “... as far as the borrower rankings go, I am not certain tonight’s results will give any guidance to lenders on their business partners in the next twelve months.”
With the exception of Bear Stearns, the majority of the industry reshaping happened long after last year’s votes were cast. This year’s vote will be much more revealing. Has the unquestioned levelling of the prime brokerage playing field actually translated into repositioning of the borrowers in the rankings? Have lenders actually experienced a demonstrable change in their business flows over the past year. If so, what has the impact been on the service standards and relationship side of the business? I am also curious whether the borrowers’ view of the lenders has changed.
Prime Brokerage
I wrote some time ago that in addition to the new entrants into the PB world, that other firms were scrambling to come up with new products to meet the challenge of changing hedge fund expectations. The announcement of the new Prime Custody Solutions product offering by JP Morgan is just the latest example of the increasing range of choices for hedge funds. I have never believed that an unadulterated standard custody product would satisfy the service expectations of the majority of hedgies. Now that we are a year down the road from the Lehman cataclysm, some of those that changed providers in a rush may be having second thoughts. Others weren’t given a choice.
Lehman Brothers
Yesterday was the anniversary of the Lehman default, a seminal moment for the securities finance business as a subset of the wider financial turmoil the world has experienced. Aside from the hedge fund clients that still have assets frozen by the liquidators, the whole prime brokerage community was impacted. Segregation of cash and securities held by prime brokers, rehypothecation of assets and the general creditworthiness of the prime brokers all became issues that the vast majority of hedgies needed to consider, and hadn’t previously.
Tonight sees the ISF awards event rolling around again. In my blog last year I commented:
“I think next year’s results will be more interesting than this year’s based on the timing of the survey responses.” “... as far as the borrower rankings go, I am not certain tonight’s results will give any guidance to lenders on their business partners in the next twelve months.”
With the exception of Bear Stearns, the majority of the industry reshaping happened long after last year’s votes were cast. This year’s vote will be much more revealing. Has the unquestioned levelling of the prime brokerage playing field actually translated into repositioning of the borrowers in the rankings? Have lenders actually experienced a demonstrable change in their business flows over the past year. If so, what has the impact been on the service standards and relationship side of the business? I am also curious whether the borrowers’ view of the lenders has changed.
Prime Brokerage
I wrote some time ago that in addition to the new entrants into the PB world, that other firms were scrambling to come up with new products to meet the challenge of changing hedge fund expectations. The announcement of the new Prime Custody Solutions product offering by JP Morgan is just the latest example of the increasing range of choices for hedge funds. I have never believed that an unadulterated standard custody product would satisfy the service expectations of the majority of hedgies. Now that we are a year down the road from the Lehman cataclysm, some of those that changed providers in a rush may be having second thoughts. Others weren’t given a choice.
Lehman Brothers
Yesterday was the anniversary of the Lehman default, a seminal moment for the securities finance business as a subset of the wider financial turmoil the world has experienced. Aside from the hedge fund clients that still have assets frozen by the liquidators, the whole prime brokerage community was impacted. Segregation of cash and securities held by prime brokers, rehypothecation of assets and the general creditworthiness of the prime brokers all became issues that the vast majority of hedgies needed to consider, and hadn’t previously.
Lehman has re-emerged, but now carries a couple of different names – augmenting the businesses at BarCap and Nomura - as well as some new ventures launched by former Lehman employees. So the talent hasn’t been lost, just redistributed and is most definitely having an impact across the various successor firms.
Capital Raising in 2009 and Beyond
I attended a very interesting event yesterday that was hosted by Bloomberg Tradebook. DealReporter and DataExplorers gave a joint presentation that attempted to bring together capital raising and securities lending. I plan on taking a section of that presentation and using it as another example in the series of trades involving stock borrowing. Watch for that in the coming days. An excellent presentation and a great venue!
