The balancing act: how to navigate the evolving challenges of the prime brokerage industry (EY)

September 2013

KEYWORDS: Prime Brokerage, prime broker, Survey, revenue, risk management, organizational structure, Liquidity, lock-up period, leverage, margin


Ernst & Young

  • Ernst & Young

The prime brokerage industry today is facing crucial challenges brought on by the shifting composition of the hedge fund industry and the changing regulatory requirements for banks and dealers.
These factors have combined to put pressure on prime broker revenues, despite the fact that the hedge fund industry’s current US$2.4 trillion assets under management (AUM) have exceeded the US$1.95 trillion pre-crisis level. In response, leading prime brokers are attempting to differentiate themselves through unique product offerings and their ability to leverage proprietary technologies and organizational efficiencies, as well as detailed client analyses. These are the key takeaways from EY’s 2012 Prime Brokerage Survey.

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