Jul 20, 2015

Citi: Opportunities and Challenges for Hedge Funds in the Coming Era of Optimization (Institutional Investors)

The Importance of Becoming an Efficient Financing Counterpart

By: Citi

Rather than focusing solely on the revenues generated by a client, prime brokers are likely to focus increasingly on that client’s overall profitability to the firm as measured by their total return on assets (ROA). Pricing in the emerging landscape will be tied to how efficient a counterparty the hedge fund is perceived to be.

This will require a new focus on dialog and coordination between hedge funds and their financing counterparts, and more deliberate placement of debits and shorts across the manager’s set of prime brokers.

Read the online white paper (Section 6, Page 43)