HSBC To Launch Prime Services Unit

July 24, 2009 ( - HSBC is to launch HSBC Prime Services, a new joint venture between Global Markets and HSBC Securities Services (HSS).

Citing an internal memo, sister publication Global Custodian reports: “HSBC Prime Services will bring together and leverage the HSS ‘Custody Plus’ proposition and Global Markets products and distribution platform to offer clients… custody, financing, execution, collateral management, clearing and reporting needs.”

The project will be headed by Cian Burke, currently CFO and Global Business Manager for Global Markets, according to the report.

The report cites an HSBC spokesperson who said that leverage to clients will be modest, and clients will retain their rights over assets. Funds will also be segregated, avoiding the problems of rehypothecation that plagued the industry after the collapse of Lehman Brothers.

A Revolutionary Time?

The launch of a Prime Services unit comes at a revolutionary time for the prime brokerage industry.  Global Custodian’s 2009 Prime Brokerage Survey  highlighted that the old duopoly of Goldman Sachs and Morgan Stanley has ended after worries regarding counterparty risk forced hedge fund clients to move to safer banks.

Last year also saw the prime brokerage units of the now defunct Bear Stearns and Lehman Brothers merged into J.P. Morgan and Barclays PLC, respectively. The Bank of America also merged with Merrill Lynch, another major prime broker, according to the report.