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positive news out of APAC and opportunities highlighted in the Middle East and Australia .
And the purple patch isn ’ t confined solely to the largest players , the chasing pack , or the plucky young upstarts – the overall PB pie is growing , meaning everyone ’ s slice is now more lucrative than ever before .
Bigger and better Just five years ago when JP Morgan surpassed $ 500 billion in prime brokerage balances , the bank ’ s head of global head of prime finance , Jonathan Cossey , quipped : “ Next stop , one trillion !”. Well , fast forward to 2024 and the PB behemoth and its counterparts in the ‘ big three ’ are all reportedly around that coveted milestone .
Data from Convergence tracking the top 25 prime brokers showed their market share grew from 83.3 % in April 2023 , to 92 % in 2024 . Goldman Sachs , Morgan Stanley and JP Morgan all increased their market share substantially , despite the former two seeing drops in the number of funds they have relationships with . According to Convergence data , JP Morgan saw both new client additions and a double-digit market share percentage growth .
“ I think the last 12 months for us in particular have been standout ,” says Rieb-Smith , which has logged its best score in our sister title Global Custodian ’ s Prime Brokerage Survey since at least 2016 . “ In terms of client demand and what we have to offer , I think we ' re really unique and we have benefited from that .”
Part of this has been down to the continuing rise of multi-strategy ( multi-strat ) funds which have very sophisticated and specific demands which can only be met by certain service providers with scale and a broad offering covering a range of asset classes .
On the topic , Rieb-Smith adds : “ We ’ re in an environment where you ' ve seen the macro community morph into multi-strats ( because they ’ ve gone into equity strategies whether that be volume , capital markets and ultimately quant ). Then you ' ve got the quants who have started to look at fixed income products . These could be systematic , macro , or systematic credit funds , but you ' ve seen more and more of those firms evolve into what look like multi-strat strategies . There are also the multi manager platforms that , in order to be fully diversified and attract the capital that they ' re after , have become multi asset and therefore could be bucketed as multi-strat .
“ If you look at what those firms need in terms of prime-related services , well , cash PB and synthetics are just the basics . Those are the relatively commoditised parts of the business . There aren ' t many banks that are organised the same way as JP Morgan , whereby my team in prime financial services sales are responsible for marketing not only all those prime finance related products , but all our clearing products as well .”
“ When you go through these really volatile periods of time , if the multi-managers that are really well diversified do come out stronger than monoline hedge funds , then there is an argument for investors . That ' s why the money ' s with them and they will probably attract even more capital . They are now trading in all these other asset classes . They need a financing platform to support all of that . We ' re one of the only providers that can do all of that for them . So you can see how this growth and momentum just starts to really build over time .”
JP Morgan ’ s rival Morgan Stanley have been serial outperformers in the aforementioned
Prime Brokerage Survey for some years now -
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