Banks dismiss margin rule threat to synthetic prime brokerage

Growth in synthetic financing versus physical sees UBS, ING boost investment in prime brokerage units

synthetic prime brokerage grows
Synthetic financing can offer balance sheet efficiencies

Prime brokers are tipping synthetic equity financing to continue outpacing physical stock lending to hedge funds, despite the advent of new margin rules for non-cleared derivatives that may load additional costs onto the business.

Two dealers – UBS and ING – have buttressed their synthetic prime brokerage offerings in recent weeks in anticipation that this growth trend will continue. These provide clients with access to total return swaps (TRSs) on single stocks, equity baskets and indexes

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