TABB Group finds equity prime brokerage in transition
17 December 2014 New York
Image: Shutterstock
TABB Group has claimed that prime brokerage is in the midst of a large-scale change, according to its latest report, Equity Prime Brokerage: Exploring Uncharted Territory.
The report is the result of several months of conversations with prime services providers and independent financial analytics firms, including data from S3 Partners.
It has found that Basel III is changing the way the buy side looks at the treatment of financing and collateral.
According to the report, collateral and financing must be analysed and structured to the same level as trading costs.
In the conclusion of the report, author Radi Khasawneh said financial institutions should view their trading and financing costs holistically, including financing rates, the use of collateral, clearing choices, and analytics, in order to be the most effective capital, balance sheet and regulatory partner possible.
“Complacency would be a mistake. The onus of managing your own financing and risks is more important than ever given the extreme restrictions on bank resources and overhaul of existing business models,” commented Khasawneh.
S3 founder and managing partner Robert Sloan wrote that regulatory capital hurdles will only increase and will put increasing information pressure on asset managers.
“The Tabb Group’s independent analysis highlights our mutual belief that the right technology can solve the issues related to regulatory costs and create time for its users,” said Sloan.
The report is the result of several months of conversations with prime services providers and independent financial analytics firms, including data from S3 Partners.
It has found that Basel III is changing the way the buy side looks at the treatment of financing and collateral.
According to the report, collateral and financing must be analysed and structured to the same level as trading costs.
In the conclusion of the report, author Radi Khasawneh said financial institutions should view their trading and financing costs holistically, including financing rates, the use of collateral, clearing choices, and analytics, in order to be the most effective capital, balance sheet and regulatory partner possible.
“Complacency would be a mistake. The onus of managing your own financing and risks is more important than ever given the extreme restrictions on bank resources and overhaul of existing business models,” commented Khasawneh.
S3 founder and managing partner Robert Sloan wrote that regulatory capital hurdles will only increase and will put increasing information pressure on asset managers.
“The Tabb Group’s independent analysis highlights our mutual belief that the right technology can solve the issues related to regulatory costs and create time for its users,” said Sloan.
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