Prime Broker Revenues To Soar

Date: Thursday, May 15, 2008
Author: Emii.com

Prime brokers will generate over $11 billion in revenues from hedge funds in 2008, a 15% increase over 2006, according to a TABB Group study.

The group has also estimated that revenue from financing, stock loans and other prime services will surpass other institutional business lines by 2010 According to TABB Group, prime brokerage units will reel in more than $11 billion revenues from hedge funds in 2008, a 15% increase over 2006.

Matthew Simon and Monica Schulz, research analysts and co-authors of the study said: "We estimate industry revenues generated from financing, stock loan, custody and other prime services will surpass other institutional business lines by 2010, in particular the cash equity business, which is hovering around $12 billion a year."

The study also said that: "more than 40% reported that volatility negatively impacted returns," the majority of funds plan to reduce or maintain near-term exposure. In addition, they are planning on a continued expansion of their business, including opening up offices around the globe, as many as 800 depending on market conditions, launching new funds and trading new markets.

information for this study was gathered through interviews with 61 U.S.-based hedge funds from January to March 2008. Participants had a combined $227 billion in assets under management, representing approximately 15% of the total U.S.-based hedge fund assets.