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Prior to joining Cantor Fitzgerald , Yalmokas spent a large chunk of his working life in the equity derivatives , delta one , and stock lending businesses within prime brokerage at some of the leading players on the street . At Goldman Sachs – which Yalmokas joined shortly after the firm went public in 1999 – he spent five years building up the bank ’ s US equity financing and synthetic products operations within prime , before moving to UBS – where he was appointed head of US delta one products and prime brokerage distribution and advisory . Most recently , he ran the American prime services business at the then newly merged Bank of America Merrill Lynch ( BAML ), helping the bank grow its hedge fund market share exponentially . “ This was a period where we grew the BAML Prime balances five-fold and onboarded over 300 plus new clients before they decided to shrink it ,” he says . Joining Cantor Fitzgerald ’ s burgeoning prime brokerage arm after leaving BAML , Yalmokas has made huge inroads expanding the firm ’ s hedge fund wallet share – especially among mid-tier managers . While Yalmokas concedes challenger primes such as Cantor Fitzgerald are not endowed with the balance sheet size of major banks – nor do they have such easy access to large pools of deposits – he notes they possess a level of flexibility which is alien to most large-scale financial institutions . This agility enables Cantor Fitzgerald to seamlessly unveil new products in a timely fashion – giving the organisation a strong competitive edge . “ In the last few years , we launched equity prime , a SPAC ( special purpose acquisition company ) financing business , delta one , fixed income repo and clearing , custody , rev-con trading , outsourced trading and an asset-backed commercial paper conduit business . To launch so many products at a major bank this quickly would have been nearly impossible ,” he adds . The other notable difference , he continues , between Cantor Fitzgerald and some of its larger peers lies with technology . “ Banks are simply weak technology builders or managers , and their platforms have not changed much over the last few years ,” he says . There are several reasons why banks
Legend
JON YALMOKAS
With a 26-year career spanning equities , financing and derivatives , Jon Yalmokas , global head of prime services at Cantor Fitzgerald , has been at the centre of some truly exceptional changes in the industry .
are lagging behind on developing new technologies . Legacy systems and challenges in facilitating technology interoperability are often cited as being the biggest impediments precluding innovation at bank prime brokers , but Yalmokas is convinced that new regulatory IT costs and large , slow moving IT organisations are the main barriers . “ A lot of the budget that primes would have nominally spent on research and development is being consumed by regulatory costs ,” he says . Although Cantor Fitzgerald is subject to regulatory and ratings oversight , Yalmokas stresses the firm is encumbered by fewer regulatory costs than – say – a bulge bracket prime , which must adhere to strict Basel III requirements on capital adequacy and leverage ratios . This , he argues , means that providers such as Cantor Fitzgerald have been able to leapfrog the bank primes on technology development . On the hedge fund client side , Yalmokas says the industry has become more mainstream since the 2008 crisis . What began as a niche , cottage asset class looking after the money of wealthy individuals , family offices and ( the now largely defunct ) funds of hedge funds is now firmly institutional , running in excess of $ 4 trillion on behalf of some of the largest pension funds , sovereign wealth funds , insurance companies and investment consultancies in the world . However , the crisis did expose a number of operational deficiencies at hedge funds , not least their failure to multiprime . When Lehman Bros collapsed in September 2008 , many hedge funds were left struggling to retrieve their trapped assets from the failed bank – a crisis which prompted many firms to diversify their counterparty risk . Whereas in the immediate aftermath of the crisis , hedge funds of all stripes – irrespective of AUM – appointed an arguably excessive number of primes , Yalmokas says the situation has calmed
46 Global Custodian Fund Services Annual 2022