Global Custodian Hedge Fund Annual 2018 | Page 93

Fidelity Prime Services Global Prime Partners

This is a formidable performance by Fidelity. The firm clears the benchmarks with ease in every service area that matters. In the core service of stock borrowing and lending, it gets the best score in the survey. At one level, this is a predictable triumph, since Fidelity has access to one of the largest( and broadest) collections of captive securities available. Certainly, the detailed scores suggest that clients believe the pool is liquid enough to protect them from recalls. But the score is also a tribute to the efforts Fidelity has made to increase transparency in the securities borrowing markets through PB Optimize, a cloud-based service that aggregates the cash and synthetic financing activities of its clients, and provides intelligence on potentially awkward risks and opportunities, such as upcoming corporate actions. Importantly, detailed scores also reveal a level of satisfaction with the associated margin financing available from Fidelity that is less evident at the service area level. Capital introductions, which was an issue last year, has improved markedly. Though it is a notoriously fickle service area – the score would be even better if more clients felt they were invited to multi-manager events – Fidelity does have tremendous distribution power through in-house channels such as Fidelity Family Office Services and the Fidelity Charitable Gift Fund. Another field in which Fidelity can leverage its networks is execution. Fidelity Capital Markets( FCM) offers electronic and algorithmic execution and an anonymous crossing network for domestic equities, and in international equities trades on more than 90 execution venues in 46 countries. The score for execution is reassuringly robust. While Fidelity would probably not describe it as FX prime brokerage, the currency trading services available through Fidelity FOREX are judged to be perfect. One further benefit of working with Fidelity is also buried in the detail. Clients like Fidelity as a counterparty – because it is not a bank, or publicly owned.

GPP has benefited from the upheaval in the traditional prime brokerage industry, taking on managers as the major prime brokers shed their less profitable clients. This has driven rapid growth at the firm. GPP currently has around 230 clients, of which 75 are hedge fund managers, so its prime services client base has grown by half since last year. It has added people, and now employs 50 in London and 10 in Hong Kong, plus 30 technology and support staff in Cape Town. But growth has not diluted the ambition of the founders to stay close to clients.“ Overall very happy with the level of client service,” writes one of them.“ GPP are very responsive and tend to resolve issues swiftly.” It is a model which also appeals to new entrants.“ As a start-up hedge fund, we wanted a service provider who were accessible to us, could support us as we grow, and provide the level of support and service needed,” writes one client, explaining why he chose GPP.“ We felt access to client service personnel was important to us.” By working with Nomura and Macquarie as counterparties, clearing transactions with BNP Paribas, and placing client assets in custody with BNY Mellon, GPP is able to go beyond the human side and offer financing, futures clearing and asset safety.“ Best and most cost-efficient service for low volume users,” is how one respondent describes his access to the futures markets. GPP also has a partnership in place in capital introductions. Last summer it joined forces with Edgefolio, which uses technology to connect managers and investors. Scores and comments(“ would be nice if GPP would offer that actively”) suggest the relationship has yet to make an impact, but capital introduction is a notoriously difficult area in which to shine. GPP is doing much better in trading and execution and operations, where it has control over the outcome.“ Always found GPP ops staff to be very good,” notes a client.