Prime Brokers' Role Expanding

March 27, 2007 (PLANSPONSOR.com) - As institutional investment in hedge funds increases, so the role of the prime broker (Wall Street firms that service hedge funds) has becoming increasingly important.
By PS

Indeed, some plan sponsors that invest directly in hedge funds have chosen to directly interact with the prime brokerage community. In addition, the securities lending arms of many of these firms now have direct lending relationships with some plan sponsors.

Global Custodian, PLANSPONSOR’s sister publication covering the custody and investment business, has just released the results of the 14th Global Custodian survey of prime brokers.

The Global Custodian prime brokerage survey is widely considered to be the most important survey in the industry. The 2007 results are based on the largest ever number of responses from hedge funds. The overall number of submissions was 2,826, up 15% on 2006. Fifteen prime brokers were rated this year, and three of these prime brokers received their first-ever rating in the survey.

Table “Settings”

League tables setting out the performance of the leading prime brokers in the world by size (less than $100 Million, $100 Million – $1 Billion, More than $1 Billion), region (North America, Europe, South Africa, Japan, Asia [excluding Japan]), strategy (single strategy and multi-strategy), service area by client category (the Best in Class awards) and Global (providers who are rated in at least two size, two region and both strategy categories) are displayed in the accompanying tabs, as well as tables of displaying the Top Rated and Commended ratings secured by each prime broker and the number of Best in Class awards.

The survey methodology invited hedge funds to rate prime brokers on a scale of 1 – 7 (where 7 is excellent and 1 unacceptable) in 55 separate questions divided between nine service areas (client service, operations, consulting, financing, securities lending, reporting, capital introduction, technology, and value.) The scores were then weighted by both the size of the respondent and the importance of the question (as determined by all respondents in the survey) and averaged.

Prime brokers whose weighted average scores equaled or exceeded the total weighted average score for all prime brokers in a particular category were awarded Top Rated Status. Commended Status took account of factors other than scores alone, including improvement or deterioration since the previous year, and client comments. Prime Brokers earned Best in Class awards when their scores bettered the total weighted average score for all prime brokers in a particular service area within the categories (size, region, strategy).


For further information about the survey, please contact

Global Custodian Editor-in-Chief Dominic Hobson atdhobson@globalcustodian.com

If you would like further information about the survey data, please contact Global Custodian Director of Research, Muzaffar Karabaev atmkarabaev@globalcustodian.com.

Both can be contacted by telephone at +44 (0) 207 939 9934

Number of Best in Class Awards

Morgan Stanley

80

Deutsche

75

UBS

54

Bear Stearns

50

Bank of America

48

 Lehman

42

Merrill Lynch

36

Goldman Sachs

27

Credit Suisse Prime Services

24

Merlin Securities

22

Fimat International Banque SA

18

Barclays Capital Prime Services

17

TD Securities

16

Citigroup

6

JPMorgan

0

Number of Top rated and Commended awards

align="center"> Top rated

align="center"> Commended

Morgan Stanley

10

Deutsche

10

UBS

7

3

Bear Stearns

5

3

Bank of America

6

Lehman Brothers

5

5

Merrill Lynch

4

5

Goldman Sachs

10

Credit Suisse Prime Services

1

8

Merlin Securities

3

Fimat International Banque SA

6

Barclays Capital Prime Services

1

7

TD Securities

3

Citigroup

7

JPMorgan

1

Global

1

Morgan Stanley

5.82

2

Deutsche Bank

5.76

3

Bear Stearns

5.73

4

UBS

5.71

5

Lehman Brothers

5.68

6

Merrill Lynch

5.66

7

Goldman Sachs

5.61

8

Credit Suisse

5.58

9

Barclays Capital

5.52

10

Citigroup

5.31

Less Than $100 Million

1

Merlin Securities

6.10

2

Deutsche Bank

6.07

3

Morgan Stanley

6.07

4

Bank of America

6.01

5

Bear Stearns

5.97

6

Merrill Lynch

5.94

7

UBS

5.93

8

Fimat

5.91

9

Goldman Sachs

5.85

10

Credit Suisse

5.80

11

Barclays Capital

5.78

12

TD Securities

5.72

13

Lehman Brothers

5.56

14

Citigroup

5.36

$100 Million -- $1 Billion

1

Bank of America

6.10

2

Morgan Stanley

5.93

3

UBS

5.89

4

Deutsche Bank

5.82

5

Bear Stearns

5.78

6

Lehman Brothers

5.70

7

Goldman Sachs

5.66

8

Barclays Capital

5.59

9

Merrill Lynch

5.55

10

Fimat

5.48

11

Credit Suisse

5.45

12

Citigroup

5.36

More Than $1 Billion

1

Bank of America

5.80

2

Morgan Stanley

5.72

3

Lehman Brothers

5.69

4

Deutsche Bank

5.69

5

Merrill Lynch

5.64

6

Bear Stearns

5.63

7

Credit Suisse

5.58

8

Goldman Sachs

5.56

9

UBS

5.48

10

Barclays Capital

5.43

11

Citigroup

5.30

12

Fimat

5.18

13

JPMorgan

4.81

Single Strategy

1

Merlin Securities

6.25

2

Bank of America

6.10

3

Bear Stearns

5.96

4

Morgan Stanley

5.93

5

Deutsche Bank

5.89

6

Merrill Lynch

5.87

7

UBS

5.86

8

Goldman Sachs

5.80

9

Fimat

5.72

10

Credit Suisse

5.70

11

Lehman Brothers

5.61

12

Citigroup

5.52

13

Barclays Capital

5.42

14

JPMorgan

5.24

Multi-Strategy

1

Bank of America

5.87

2

TD Securities

5.80

3

Morgan Stanley

5.76

4

Deutsche Bank

5.71

5

Lehman Brothers

5.70

6

Bear Stearns

5.62

7

UBS

5.60

8

Merrill Lynch

5.58

9

Barclays Capital

5.56

10

Credit Suisse

5.52

11

Goldman Sachs

5.51

12

Fimat

5.39

13

Citigroup

5.24

14

JPMorgan

4.60

North America

1

Merlin Securities

6.12

2

Bank of America

6.00

3

Morgan Stanley

5.96

4

Deutsche Bank

5.93

5

UBS

5.86

6

Credit Suisse

5.83

7

Merrill Lynch

5.79

8

Goldman Sachs

5.79

9

Bear Stearns

5.76

10

Lehman Brothers

5.66

11

TD Securities

5.66

12

Barclays Capital

5.62

13

Citigroup

5.53

Europe

1

Lehman Brothers

5.75

2

Merrill Lynch

5.59

3

Deutsche Bank

5.45

4

Bear Stearns

5.44

5

Fimat

5.42

6

Morgan Stanley

5.41

7

Barclays Capital

5.40

8

Credit Suisse

5.24

9

Goldman Sachs

5.11

10

UBS

5.08

11

Citigroup

4.44

South Africa

1

Deutsche Bank

4.86

Japan

1

Lehman Brothers

6.29

2

Deutsche Bank

5.85

3

Morgan Stanley

5.84

4

UBS

5.57

5

Goldman Sachs

5.50

Asia (Excluding Japan)

1

Deutsche Bank

6.12

2

UBS

5.80

3

Morgan Stanley

5.79

4

Goldman Sachs

5.41

5

Merrill Lynch

5.34

6

Lehman Brothers

5.07

7

Credit Suisse

5.04

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