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30th October 2023 | Whitepapers

The Rising Risk of FX Prime Brokerage Consolidation

Acuiti today publishes The Rising Risk of FX Prime Brokerage Consolidation report, in partnership with Standard Chartered.

This report was based on surveys or interviews of 57 hedge funds about how they view the FX prime brokerage market, their attitudes to counterparty and onboarding risk and what matters most to them in a prime brokerage relationship.

The key findings included:

  • Hedge funds are reducing the number of FX PB relationships as providers retreat from the market or impose minimum revenue requirements on clients
  • Concern is high across the market about dependency on key providers with almost 70% of hedge funds in this study either very or quite concerned about the impact that the withdrawal from market of one or more of their FX PB providers would have on their business
  • Concern is highest among firms that had gone through the experience of being offboarded by an FX PB provider
  • Firms that had lost access to a prime broker reported reduced access to liquidity, costs of reallocating and integrating with a new provider and increased operational risk
  • Over a third of survey respondents said that they did not have an executable backup plan if they were offboarded by their core FX PB provider
  • Hedge funds are looking to grow their FX PB relationships despite the challenges in order to access unique opportunities in the international market

Download the full report below.