[ S U R V E Y | P R I M E B R O K E R A G E ]
Readers will hardly fail to notice that the current state of the prime brokerage industry comes in for multiple analyses in this issue of Global Custodian . An in-depth piece by our editor Jon Watkins sets the scene , while several thought leadership contributions reinforce a broadly common set of conclusions .
“ Arguably the biggest change to the prime brokerage landscape over the past year was the fallout from Archegos ,” says CIBC . “ This has led to the exit of specific global PBs entirely from the space as well as others scaling back their synthetic exposure . In addition , we saw the further consolidation of the prime space with the completion of business acquisitions .” For Cowen , the meme stock phenomenon , Archegos implosion , Chinese stock rout , and more recently the rising interest rate cycle and the Russian invasion of Ukraine , have presented prime brokers with consecutive stress tests : “ While most firms navigated these challenges , by year ' s end the industry witnessed the demise or substantial withdrawal of what were formerly major players in the PB space .” In light of recent developments , most managers and their service providers seem reconciled to further regulatory requirements coming down the pipe in due course . Given these strains , it is pleasing to report an uptick in favourable perceptions from this year ’ s respondent cohort . Apart from Capital Introductions and Asset Safety , all aggregate category scores have improved year on year ( 2021 scores having been adjusted slightly to take into account this year ’ s weighting criteria and minor post-survey data scrubbing ). Interestingly , the biggest improvement in aggregate scores is recorded for Fixed Income – likely to attract growing attention in a period of anticipated interest rate rises . Capital Introductions meanwhile remains an area where the gap between client expectations and what is actually available is hard to bridge , even if there is no overt dissatisfaction expressed with what providers are able to bring to the table . Looking at the individual provider ratings in the pages that follow , it is important to bear in mind that these reflect the perceptions of each prime broker ’ s own clients . One should therefore be wary of making direct comparisons given the different client profiles of the various PBs . For guidance on how to read the provider tables , please see page 90 .
Market uncertainty makes for prime time
The 2022 Prime Brokerage Survey has been conducted during what might proverbially be called ‘ interesting times ’.
Methodology
The prime brokerage survey asked clients to assess the services that they receive from their Prime Brokers . The same service categories as last year have been retained and respondents were asked only one quantifiable rating question per category . This related to the overall service level per category and was done through a sliding scale from ‘ Unacceptable ’ to ‘ Excellent ’. Respondents were also invited to add colour to their ratings though an optional comment box per category . The published results use Global Custodian ’ s conventional seven-point scale familiar to readers of the magazine ( where 1 = unacceptable and 7 = excellent ). Ten responses are the minimum sample number required to assess a service provider sufficiently for full category results to be published . Individual responses are weighted for the size of the respondent as measured by assets under management . Scores in any individual service area that attract fewer than three responses are excluded from the calculations . Where a provider has recorded three or more responses per category , average scores can be made available to the provider concerned for internal use . More granular analyses than are published may also be available to providers . For more information on bespoke reports , please contact beenish . hussain @ globalcustodian . com .
58 Global Custodian Fund Services Annual 2022