Boutique prime brokers offering a far more customised FX service

The prime brokerage industry is facing some of its toughest times since the financial crisis, squeezed on one end by stricter regulations and at the other by falling profits. But, as Caroline Henshaw now reports, mid the chaos, a new generation of agile and sophisticated boutique FXPBs have emerged that can offer clients a service tailored to their diverse needs.

FX prime brokers play an integral role in currency markets by providing the clearing services and credit that financial institutions and exchanges from around the world need to trade with each other. They stand as an intermediary between funds and two important sets of counterparties: institutional investors with shares to lend for short selling, and commercial banks with money available for margin loans. But the rapid growth of global FX markets, which are now worth more than $5 trillion a day, and the increasing diversity of players trading in them has forced FXPBs to evolve far beyond their original functions from when they first entered the scene in the 1990s. Broader role Prime brokers now have to cater to a broader range of investors all with varying needs, including other brokers, high-volume traders, hedge funds, asset managers, CTAs and smaller financial institutions. “Clients’ growing need for a more personalised service has opened up a greater role for prime brokerages, which provide...continued

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