130/30 has “opened up serious questions” for brokers and custodians: report
Feb 13th, 2008 | Filed under: 130/30A survey from consultancy Vodia Group backs up previous surveys from Merrill Lynch and AllAboutAlpha.com by finding that roughly 15% of institutional investors currently invest in 130/30 funds. As a result of expected growth, Vodia anticipates major changes in the prime brokerage and custodian businesses. According to the firm’s press release:
“130/30 has opened up serious questions in the division of business between brokers and custodians. While there have been disagreements between brokers and custodians looking to partner, the opportunity is too new to have generated any long-term damage. This issue will become more pronounced as 130/30 grows in importance and as client relationships are deepened through the provision of new services.”
Apparently life won’t be all that bad for prime brokers though. According to a chart released by the firm, prime brokerage financing revenues will increase dramatically over the next 4 years - even as financing spreads come under pressure…
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