Bank of America trims the hedge funds
16 January 2015 New York
Image: Shutterstock
New regulations forced Bank of America to end its relationship with around 150 hedge funds last year in its prime brokerage group.
According to reports, the cuts included many of its quantitative hedge fund customers, or those that use computer programmes to trade.
Basel III has been cited as the main trigger prompting the biggest banks to cut partnerships and increase fees for clients that are not up to scratch in terms of making profits.
Citi predicted last year that the costs of financing are likely to rise as Basel III liquidity coverage ratios and net stable funding ratios negatively affect “prime broker balance sheets and force broker-dealers to re-price their offerings".
It said in a report: “Hedge funds that move from a service-based to a relationship-based model with their counterparts are likely to have better access to financing and realise less extreme price increases.”
According to reports, the cuts included many of its quantitative hedge fund customers, or those that use computer programmes to trade.
Basel III has been cited as the main trigger prompting the biggest banks to cut partnerships and increase fees for clients that are not up to scratch in terms of making profits.
Citi predicted last year that the costs of financing are likely to rise as Basel III liquidity coverage ratios and net stable funding ratios negatively affect “prime broker balance sheets and force broker-dealers to re-price their offerings".
It said in a report: “Hedge funds that move from a service-based to a relationship-based model with their counterparts are likely to have better access to financing and realise less extreme price increases.”
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