Prime Brokerage
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Shifting Prime Relationships Burden Smaller Funds
March 2, 2009
As is to be expected, prime brokers are paring their services and staff to adjust to the reduction in revenues. GMI's Ahmad said services such as capital introduction are still available at the big primes, but those groups are thinner, perhaps because their focus on funds that are already large makes finding new capital less urgent. And ancillary offerings like conferences have mostly been eliminated, said Ahmad.
Although GMI is a relatively small fund, it opened up a second prime brokerage account in January at Newedge. While the Paris-based firm's prime unit is far from the largest, it offers one feature that eludes even Goldman Sachs. "There's an implicit state guarantee with Newedge that we don't have with GS," Ahmad said. "They only came out of their nationalized state a short while ago, the government still owns a substantial part of their equity, and Sarkozy is standing behind them."
