Prime numbers

摘要

Every institution from large com-mercial banks to smaller stand-alone investment banks wants a piece of the potentially lucrative prime brokerage business. The reason for this growing interest is the vast influx of funds into the hedge fund industry. In August, the Hennessee Hedge Fund Advisory Group, a global adviser to hedge fund investors, published the findings of its annual hedge fund manager survey. The survey results showed that the hedge fund industry had grown by 34% in the first half of the year, to $795bn. Moreover, hedge funds reported they still had the capacity to grow assets by a staggering 197%. The reason why prime brokerage can be so profitable for banks is that, on average, hedge funds turn their portfolio over three times a year. Indeed, Credit Suisse First Boston estimates that hedge funds contributed $21bn to global investment banking revenues last year - a whopping 35% of banks' equities revenues, or 13% of total investment banking income.