Goldman Sachs Prime Brokerage Agreement

Early brokers, sometimes called premium brokers, are usually larger financial institutions that have transactions with other large institutions and hedge funds. From 2018, for example, says Morgan Stanley, its premium brokerage unit will serve as a partner for more than 800 hedge funds and institutional clients. Although first-class brokers offer a wide variety of services, a client is not obligated to participate in all of them and can have services run by other institutions, as they see fit. A first-class broker offers a number of services for qualified clients. The assigned broker or broker can provide resolution agent services at the same time as leverage financing. Asset retention may be offered, as can daily preparations for bank statements. Premium brokers offer a level of resources that many institutions may not be able to have in the home. Essentially, a first-class brokerage service provides large institutions with a mechanism to outsource many of their investment activities and focus on investment objectives and strategies. But what is a first-class broker? I hear you say it. I`m glad you asked me that question.

Here`s the answer. The majority of first brokerage clients are made up of large and large investors and institutions. Money managers and hedge funds often fulfill qualifications, as well as arbitragers and a large number of other professional investors. In the case of hedge funds, quality brokerage services are often seen as important to the success of a fund. As a result, customers who engage in a large short sale or leverage represent a more lucrative opportunity than customers who make fewer short sales and/or use minimal leverage. Clients whose market activities are primarily focused on fixed income generally earn less prime brokerage revenues, but they can still offer significant economic opportunities in the Investment Bank`s Repo, Currencies (fx), Futures and Flow divisions. Restructuring transactions in 2008 included the acquisition of Bear Stearns in JP Morgan, Barclays` acquisition of Lehman Brothers` U.S. assets, Bank of America`s acquisition of Merrill Lynch, and Nomura`s acquisition of certain Lehman Brothers assets in Europe and Asia. The diversification of counterparties has seen the largest flows of client assets from Morgan Stanley and Goldman Sachs (the two companies that have played the biggest role in the business in the past and were therefore the most engaged in the diversification process) and the companies considered the most creditworthy at the time.

The banks that recorded the most were Credit Suisse, JP Morgan and Deutsche Bank. During these market changes, HSBC launched a first-rate brokerage business called HSBC Prime Services in 2009, which built its first-rate brokerage platform out of the deposit business.