Boutique PB’s continue their success amid less options from Tier 1 banks

Posted by Paul Kelly

Boutique prime brokers continue to have a significant role in the PB market, focusing on small to mid-sized hedge funds who are less likely to find a home to transact their business with a Tier One bank.

With recent reports of larger banks beginning to shut their prime brokerage businesses, there rises an opportunity for smaller prime brokers to generate more business and thrive in today’s market. As previously reported, Credit Suisse exited the prime broker market, whilst the Bank of America has opted to close part of its prime broking unit, and most recently Japanese lender Nomura cut back its cash prime brokerage business in both Europe and the US following recent reported losses. This has led to much greater market volatility which in turn further increases risk, likely discouraging large prime brokers to look for new business from smaller funds or possibly forcing them to increase collateral requirements further in order to balance risk.

Boutique prime brokers are ideally positioned to swiftly examine their clients, due to the fact that they are free of both legacy technologies found in large investment banks and administrative bureaucracy, with a rapid turnaround being vital to hedge fund managers, who need to ensure their service requests operate smoothly.

Amid this turbulent market, small prime brokers such as Linear offer a more personal service, specifically tailored to each client we work with. We are more agile when reacting to market changes and shocks, making firms like Linear more attractive and stable to the mid-market sector.

Our ability to have a more personal relationship with our clients enables us to have a greater and deeper understanding of our clients trading needs, investment strategy and pain points within their operational requirements. We invest significant resources and time during the onboarding process, enabling us to provide the best client experience possible.

The growing number of small and medium sized hedge funds, who aren’t large enough to meet the criteria of being a standalone client at a major investment bank, can be assured that Linear is well placed to support their needs as they scale as a business.

Since its inception in 2010, Linear has been a consistent provider of PB, custody, execution and clearing services, reaffirming the importance of reliability for Linear’s clients. If you would like to find out more about how Linear can support you, please get in touch.