17 May 2017
New York
Reporter: Drew Nicol

Prime brokers failing to retain hedge funds


Service providers to the hedge fund industry must “address concerns over cost and quality of service” in order to retain securities lending clients, according to Preqin’s Amy Bensted.

A Preqin survey of 270 hedge funds found that a quarter of respondents had changed service providers during 2016 due to dissatisfaction.

Of that quarter, 75 percent only changed one service provider and 39 percent switched prime brokers.

The survey was conducted in November 2016 and also used data on more than 2,000 hedge fund service providers from Preqin’s Hedge Fund Online database.

Preqin’s survey also revealed that 19 percent changed their fund custodian in 2016.

When questioned on their reason for changing providers, 55 percent cited cost as a key reason, with 21 percent citing dissatisfaction over service, according to Preqin.

A further 15 percent said that coping with regulations was also factor.

Amy Bensted, Head of Hedge Fund Products: “Service providers are a vital part of the hedge fund landscape, assisting in the smooth running of operations. They perform a range of vital services in the industry, such as custody and valuation of assets, facilitating securities lending, providing advice on regulation and fund terms, and assisting with the fundraising and investor subscription processes.

“In order to retain hedge fund clients and win new business, service providers need to address concerns over cost and quality of service, particularly as investor scrutiny over fees and performance continues to grow. These firms will need to maintain a careful balance by improving their service offering while still reducing costs.”

More Industry news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
BlackRock sees lending revenue growth
17 October 2017 | London | Reporter: Drew Nicol
BlackRock saw its securities lending revenue hit $150 million in Q3, compared to $142 during the same period in 2016
Nex appoints new CEO
16 October 2017 | London | Reporter: Jenna Lomax
Ken Pigaga, who was previously global COO at the fintech company, will begin his new role this month, but will remain as a director on the NEX board
Is the sec lending industry experiencing evolution or revolution?
13 October 2017 | London | Reporter: Jenna Lomax
The securities lending industry is facing an evolution, as opposed to a revolution, attendees heard at the ISLA 8th Annual Post Trade Conference
Brexit: next three years ‘crucial’ for sec lending industry
13 October 2017 | London | Reporter: Jenna Lomax
Panellists at the ISLA 8th Annual Post Trade Conference discussed how the UK’s exit will affect the securities lending industry
The industry needs to ‘embrace’ fintech
13 October 2017 | London | Reporter: Jenna Lomax
The securities lending industry needs to embrace fintech, according to a panellist at ISLA 8th Annual Post Trade Conference
ISLA appoints Jonathan Lombardo as chair
11 October 2017 | London | Reporter: Jenna Lomax
As part of a wider board reshuffle BNY Mellon's Simon Tomlinson was re-elected as treasurer, while Krangel, Citibank, moved into the role of executive officer.
ColleX executes first T+0 triparty collateral loan
10 October 2017 | London | Reporter: Becky Butcher
ColleX has executed its first T+0 triparty collateral loan to help improve efficiency in securities finance trading