We are pleased to partner with UBS, one of the industry's premier bank prime brokers
, to strengthen our market position,' said Anthony Brocco, chairman, Advanced Markets Ltd.
We expect significant growth in the equity derivatives and synthetic finance space in response to the regulatory pressures facing prime brokers
and their clients.
Although the industry has grown considerably, its investors still mostly consist of prime brokers
and subsidiaries of hedge fund management companies.
UBS is among the five biggest prime brokers
in Asia, which provide services to hedge funds.
The jury is still out on whether this investment strategy will be successful and this, plus the HIRE Act, which allows tax authorities worldwide to hunt down and prosecute firms using synthetics to bypass withholding tax of US share dividends, may well dampen enthusiasm among prime brokers
if they suspect the investment is purely for tax purposes.
Leading US and European banks are engaged in intense competition for lucrative business in the hedge fund industry and this is pressuring margins and may be eroding credit controls, say senior prime brokers
leading the initiative and covering execution in the regional markets include Credit Suisse and UBS.
This is in direct response to hedge funds that are increasingly seeking to diversify counterparty risk while continuing to deal directly with their prime brokers
Currently, the settlement of hedge funds' trades between their executing and prime brokers
occurs as OTC transactions without any CCP guarantee.
The increase reflects both growth in overall hedge fund assets under management (AUM) as well as lower levels of borrowing from prime brokers