Primes push synthetics as Basel III bites
Growth in synthetic financing for hedge funds could alleviate some of the pressure on prime brokers as capital and liquidity constraints come to the fore
The heads of business in the world’s largest banks face a common problem. Tougher regulations that increase capital and liquidity ratios for global banks are forcing a rethink of capital-intensive businesses. The goal of every business head these days is to grow revenues while simultaneously shrinking their risk exposure, balance sheet usage and capital consumption. Prime brokerage is no exception.
The capital and liquidity requirements of Basel III have made life harder for prime brokers. The
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