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throughout 2022 as the game of musical chairs stretched beyond the providers into the personnel . Many other players saw opportunities in the industry shake-up and the likes of Cowen , Cantor Fitzgerald and Jefferies have all looked to capitalise , though without being “ ambulance chasers ”, as one source highlights . This section of market is fierce in competition , with specialities and areas of focus differing between the aforementioned and the likes of Fidelity , Interactive Brokers , BTIG and TD Bank – the latter , which recently announced its acquisition of Cowen , which will make for an interesting combination . While not wanting to dig up old ground on Archegos – with the incident and various failings well publicised – the saga not only reshaped the landscape but changed the nature of relationships between clients and providers , along with the way the industry views risk in the current climate . “ Obviously , Archegos was a huge deal – quite possibly the biggest event in prime brokerage history ,” says Dan Childs , head of European prime services sales for EMEA , Jefferies . “ Given the size of losses , the industry has paused for thought and there will inevitably be some changes as a result .
“ With some meaningful market players lost as a result , there has naturally been a shift towards those leaning in to grow their business . There has also been a renewed industry focus on transparency , and the importance of relationships . “ Going forward , the relationship prime brokers have with their hedge fund clients will become even more critical .”
Archegos changed everything Jorge Hendrickson , the new co-head of prime services at JonesTrading , describes Archegos as a “ wake-up call ” for the industry , but stresses that the industry has always been very efficient at filling a gap . “ It certainly took some players out of the business and allowed others to rethink their approach to this space ,” he says . “ What it did for the other PBs that were competing with those primes in certain areas - or wanted to get into those areas - is that it created an opportunity for them to fill in some of those slots , hence the musical chairs . “ Archegos was just one instance , it certainly was a big one , but those things are occurring - certainly not to that dramatic effect - in our industry all the time , creating opportunity or the need for providers to shift in the clients that they ' re focusing on , so it ' s very efficient for the others to then fill those slots . “ As a result of the movement there , it ' s caused movements elsewhere , and so we ' re probably going to hopefully benefit , indirectly if you will .” The collapse of Archegos demonstrated how risks associated with leverage , concentration and interconnectedness can rapidly develop – highlighting the need for more work to be done to monitor risks related to derivatives and leverage . According to multiple sources , that work is most definitely now being done . Though not confirmed or addressed by any of the top tier , there is widespread talk of some offboarding clients or limiting access for numerous funds . The renewed focus on risk management and diversification amongst their client port-
24 Global Custodian Fund Services Annual 2022