Institutional Investor's Alpha Magazine - October 2007 - (Page 53)

hedge fund managers have come even more to realize the advantages of doing business with a bank with a AA-rated balance sheet, as opposed to a broker-dealer whose lending capacity may be more restricted. Meanwhile, New York–based Citi continues to repair the reputation of its prime brokerage business, following the decision by its then–Salomon Brothers unit to pull funding from several fixed-income hedge funds caught in the wake of LTCM’s descent. The bank moves into the No. 4 spot among prime brokers overall, up from No. 8 last year. “It’s almost a decade since we stumbled,” says Alice Hackett, co-head of Citi Prime Finance in New York. “We’ve stood by our clients through recent volatility in the markets. Our margins remained commercial and competitive.” Credit Suisse, which is No. 5 for a second year in a row, has been working to bolster its prime brokerage business by adding more experienced professionals and has quietly hired away a slew of talent from rivals such as Morgan Stanley. Roy Martins, who joined Credit Suisse from Morgan Stanley in May, says the bank has worked to create a seamless prime brokerage platform that integrates all aspects of the financing business, from cash equities to nonrecourse loans to single-stock swaps and customized baskets. “Breaking down silos is what clients want, but in practice few banks appear to have achieved this,” says Martins, head of international prime services in London. The firm also launched two major new initiatives over the past year: Absolute Prime, a bespoke platform that can handle as much or as little of a hedge fund’s prime brokerage and administrative functions as each client wants, and Delta One, a platform to provide clients with complex derivatives strategies such as totalreturn swaps. Even as universal banks such as Citi and Credit Suisse TOP PRIME BROKERS Rank 2007 1 2 3 4 5 6 7 8 9 10 2006 1 2 3 8 5 9 6 4 7 10 Firm MORGAN STANLEY GOLDMAN, SACHS & CO. BANC OF AMERICA SECURITIES CITI CREDIT SUISSE BEAR, STEARNS & CO. DEUTSCHE BANK UBS LEHMAN BROTHERS MERRILL LYNCH MORGAN STANLEY Stuart Hendel, 49, Global Head of Prime Brokerage STUART HENDEL HAS NOW LOOKED AT LIFE FROM BOTH SIDES — of the hedge fund industry, that is. In 2004, after 15 years at Morgan Stanley, most of them in prime brokerage, Hendel left to join start-up hedge fund Eton Park Capital Management. But early this year he was lured back to Morgan Stanley to run the firm’s prime brokerage operation, filling the opening created by Richard Portogallo’s promotion to head of the U.S. equity division. “Prior to leaving for Eton Park, I was making an educated guess as to what the buy side needed,” says Hendel. Now, having built the operations platform at Eton Park, he knows exactly what hedge funds want. Morgan Stanley, which began offering prime brokerage services in 1984, continues to invest aggressively in technology and support for hedge funds.

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - October 2007

Institutional Investor's Alpha Magazine - October 2007 Contents Letter from the Editor Longs & Shorts Pension Corner: Applied Knowledge The Good Guys: Autism Advocate Interview: Nerves of Steel Cover Story: Ivy League Education Alpha Awards: Top Service Providers: Trying Times Strategies: Passage to India Profile: The Oracle of Irvine Alpha Bytes: Futurama Research Center: Funds of Funds 50 Unhedged: Commentary: Crisis? What Crisis?

Institutional Investor's Alpha Magazine - October 2007

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