Mixed Signals for Prime Brokerage

As they look to woo hedge fund clients, some of the biggest players are actively expanding prime broker biz and adding to personnel. In a Q2 2011 Earnings Call, JPMorgan Chase's CFO Douglas L. Braunstein announced the launch of prime brokerage services in Asia for early 2012.

In June, JPMorgan Chase rolledout its prime brokerage services for European hedge funds. But other players gave off mixed signals.

While Nomura is looking to build its biz stateside, adding senior managers in the U.S., there were cutbacks elsewhere. Back in April, Nomura slashed staff on its European prime brokerage team. In July, BNP Paribas SA announced the launch of it global prime-brokerage platform in more than 50 markets. Reports note that BNP Paribas will add staff next year in the U.S., Europe, and Asia. But in July, they cut client services staff.

Meanwhile, Credit Suisse announced layoffs in prime services. Citi Prime Finance, the prime brokerage end of Citigroup, had some management shakeups with departures and new hires.

But consolidation is taking the biggest toll on job opps. Acquisition activity by bigger players is decimating smaller and independent prime brokers. efinancialCareers recently reported on the latest acquisition of Alaris Trading Partners by broker dealer Concept Capital Markets.

HFM Week reports that of "the approximately 20 'mini primes' that existed in the first quarter of 2010, half are no longer in business, while others have reduced the scale of their services."

If you're looking to jump ship to a bigger player, it's way past time to fly. Look for stiff competition for jobs from peers with major name-brand prime brokerage experience. Plus, as hedge funds look to pull back on the number of prime brokers they use, the trickle down is sure to impact hiring down the road at prime brokers. But even with unsure times ahead, regulation is sure to keep compliance personnel in hot demand.