Capital Introductions
Morgan Stanley has shaped the capital introductions business since 1997. In the decade that has followed, the Morgan Stanley Prime Brokerage Capital Introductions team has built the pre-eminent franchise on Wall Street. Institutional Investor’s Alpha Magazine, which polls the universe of hedge fund managers, has ranked the Morgan Stanley Capital Introductions team #1 since they initiated the awards in 2005. Our Capital Introductions team of more than 40 people works with over 1,800 global institutional investors including pensions, endowments, foundations, insurance companies, family offices, consultants and funds of funds. The team is organized regionally with offices in New York, Westchester, Chicago, San Francisco, London, Paris, Hong Kong and Tokyo, and functionally according to hedge fund strategy and investor verticals. The Capital Introductions team focuses its consulting efforts on creating a tailored approach for every client. This is the result of spending significant time to understand the needs, goals and value proposition of each client. The team distinguishes itself from its competition in its real-world experience on the client side of the business, and is often lauded for the practical advice that is the team's trademark. Whether it is assisting in the launch of a new product or working to diversify a firm’s investor base, Morgan Stanley's Capital Introductions team has the privilege of working with high quality portfolio managers around the globe. The Capital Introductions team does not sell hedge funds or serve as a placement agent for hedge funds and does not make recommendations of any kind to institutional investors. Our service facilitates the process of introducing managers to qualified institutional investors based on an informed understanding of each investor's interests. Morgan Stanley's proprietary relationship management system captures our discussions with investors around the globe to keep us abreast of general industry trends, capital flows and preferences.
Monday, April 23, 2007
Kidder, Peabody & Co
Kidder, Peabody & Co. was a U.S. based securities firm, established in Massachusetts in 1865. Its operations included investment banking, brokerage and trading. The Firm was sold to the GE in 1986 and subsequently sold to PaineWebber in 1994. Following its acquisition by PaineWebber, the Kidder, Peabody named was dropped, ending the Firm's 130 year presence on Wall Street.
Friday, April 20, 2007
Prime Brokerage Research
As part if my current role i deal with prime services outfits within Asia Pac. here is some research ive done on the subject and specifically which banks operate within the PB space
Prime Brokerage is the generic name for a bundled package of services offered by investment banks to hedge funds. The business advantage to a hedge fund of using a Prime Broker is that the Prime Broker provides a centralized securities clearing facility for the hedge fund, and the hedge fund's collateral requirements are netted across all deals handled by the Prime Broker. The Prime Broker benefits by earning fees ("spreads") on financing the client's long and short cash and security positions, and by charging, in some cases, fees for clearing and/or other services.
The following "core services" are typically bundled into the Prime Brokerage package:
Global custody (including clearing, custody, and asset servicing)
Securities lending
Financing (to facilitate leverage of client assets)
Customized Technology (provide hedge fund managers with portfolio reporting needed to effectively manage money)
Operational Support (prime brokers act as a hedge fund's primary operations contact with all other broker dealers)
In addition, certain prime brokers provide additional "value-added" services, which may include some or all of the following:
Capital Introduction - A process whereby the prime broker attempts to introduce its hedge fund clients to qualified hedge fund investors who have an interest in exploring new opportunities to make hedge fund investments.
Office Space Leasing and Servicing - Certain prime brokers lease commercial real estate, and then sublease blocks of space to hedge fund tenants. These prime brokers typically provide a suite of on-site services for clients who utilize their space.
Risk Management Advisory Services - The provision of risk analytic technology, sometimes supplemented by consulting by senior risk professionals.
Consulting Services - A range of consulting / advisory services, typically provided to "start-up" hedge funds, and focused on issues associated with regulatory establishment requirements in the jurisdiction where the hedge fund manager will be resident, as well as in the jurisdiction(s) where the fund itself will be domiciled.
The history of prime broking and its development in financial circles since the seventies:
The basic services offered by a prime broker give a money manager the ability to trade with multiple brokerage houses while maintaining, in a centralized master account at their prime broker, all of the hedge fund’s cash and securities. Additionally, the prime broker offers stock loan services, portfolio reporting, consolidated cash management and other services. Fundamentally, the advent of the prime broker freed the money manager from the more time consuming and expensive aspects of running a fund. These services worked because they also allowed the money manager to maintain relationships with multiple brokerage houses for IPO allocations, research, best execution, conference access and other products.
The concept and term "prime brokerage" is generally attributed to the U.S. broker-dealer Furman Selz in the late 1970s. In the pre-prime brokerage marketplace, portfolio management was a significant challenge; money managers had to keep track of all of their own trades, consolidate their positions and calculate their performance regardless of which brokerage firms executed those trades or maintained those positions. The concept was immediately seen to be successful, and was quickly copied by the dominant bulge bracket brokerage firms such as Morgan Stanley, Bear Stearns, Merrill Lynch, Lehman Brothers, and Goldman Sachs. At this nascent stage, hedge funds were much smaller than they are today and were mostly domestic (US) long-short equities funds. The first overseas prime brokerage business was created by Merrill Lynch International Bank in London in the late 1980s.
Through the 1980s and 1990s, prime brokerage was largely an equities-based product, although various prime brokers did supplement their core equities capabilities with basic bond clearing and custody. In addition, prime brokers supplemented their operational function by providing portfolio reporting; initially by messenger, then by fax and today over the web. Over the years, prime brokers have expanded their product and service offerings to include some or all of the full range of fixed income and derivative products, as well as foreign exchange and futures products.
As hedge funds have proliferated globally through the 1990s and the current decade, prime brokerage has become an increasingly competitive field and an important contributor to the overall profitability of the investment banking business. As of 2006, the most successful investment banks each report over two billion dollars in annual revenue directly attributed to their prime brokerage operations (source: 2006 annual reports of Morgan Stanley and Goldman Sachs).
Prime Brokerage is the generic name for a bundled package of services offered by investment banks to hedge funds. The business advantage to a hedge fund of using a Prime Broker is that the Prime Broker provides a centralized securities clearing facility for the hedge fund, and the hedge fund's collateral requirements are netted across all deals handled by the Prime Broker. The Prime Broker benefits by earning fees ("spreads") on financing the client's long and short cash and security positions, and by charging, in some cases, fees for clearing and/or other services.
The following "core services" are typically bundled into the Prime Brokerage package:
Global custody (including clearing, custody, and asset servicing)
Securities lending
Financing (to facilitate leverage of client assets)
Customized Technology (provide hedge fund managers with portfolio reporting needed to effectively manage money)
Operational Support (prime brokers act as a hedge fund's primary operations contact with all other broker dealers)
In addition, certain prime brokers provide additional "value-added" services, which may include some or all of the following:
Capital Introduction - A process whereby the prime broker attempts to introduce its hedge fund clients to qualified hedge fund investors who have an interest in exploring new opportunities to make hedge fund investments.
Office Space Leasing and Servicing - Certain prime brokers lease commercial real estate, and then sublease blocks of space to hedge fund tenants. These prime brokers typically provide a suite of on-site services for clients who utilize their space.
Risk Management Advisory Services - The provision of risk analytic technology, sometimes supplemented by consulting by senior risk professionals.
Consulting Services - A range of consulting / advisory services, typically provided to "start-up" hedge funds, and focused on issues associated with regulatory establishment requirements in the jurisdiction where the hedge fund manager will be resident, as well as in the jurisdiction(s) where the fund itself will be domiciled.
The history of prime broking and its development in financial circles since the seventies:
The basic services offered by a prime broker give a money manager the ability to trade with multiple brokerage houses while maintaining, in a centralized master account at their prime broker, all of the hedge fund’s cash and securities. Additionally, the prime broker offers stock loan services, portfolio reporting, consolidated cash management and other services. Fundamentally, the advent of the prime broker freed the money manager from the more time consuming and expensive aspects of running a fund. These services worked because they also allowed the money manager to maintain relationships with multiple brokerage houses for IPO allocations, research, best execution, conference access and other products.
The concept and term "prime brokerage" is generally attributed to the U.S. broker-dealer Furman Selz in the late 1970s. In the pre-prime brokerage marketplace, portfolio management was a significant challenge; money managers had to keep track of all of their own trades, consolidate their positions and calculate their performance regardless of which brokerage firms executed those trades or maintained those positions. The concept was immediately seen to be successful, and was quickly copied by the dominant bulge bracket brokerage firms such as Morgan Stanley, Bear Stearns, Merrill Lynch, Lehman Brothers, and Goldman Sachs. At this nascent stage, hedge funds were much smaller than they are today and were mostly domestic (US) long-short equities funds. The first overseas prime brokerage business was created by Merrill Lynch International Bank in London in the late 1980s.
Through the 1980s and 1990s, prime brokerage was largely an equities-based product, although various prime brokers did supplement their core equities capabilities with basic bond clearing and custody. In addition, prime brokers supplemented their operational function by providing portfolio reporting; initially by messenger, then by fax and today over the web. Over the years, prime brokers have expanded their product and service offerings to include some or all of the full range of fixed income and derivative products, as well as foreign exchange and futures products.
As hedge funds have proliferated globally through the 1990s and the current decade, prime brokerage has become an increasingly competitive field and an important contributor to the overall profitability of the investment banking business. As of 2006, the most successful investment banks each report over two billion dollars in annual revenue directly attributed to their prime brokerage operations (source: 2006 annual reports of Morgan Stanley and Goldman Sachs).
Thoughts on generation Y
A client of mine, who is in the business of hiring youngters, now gives actual seminars to fellow hiring managers on the subject of Generation Y. its incredible how the workforce is now adapting to us. we are unique, we are simply unable to sit and wait. we are a generation on the move. with technology in our right hand (usually a blackberry or Apple i-phone) and unbridled enthusiasm for big things in our left ( this is embodied in our "stay at one firm for less-than-a year" approach to careers) we are turning business literally upside down.
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