Goldman Sachs and Credit Suisse have emerged from the financial crisis as the biggest suppliers of brokerage services to the embattled hedge fund industry, a new study showed on Tuesday.
The inaugural global survey by data group Hedge Fund Intelligence covers more than $1.6 trillion of assets - the bulk of the hedge fund industry - and names Goldman as the leading "prime broker" with more than 900 mandates and $222.6 billion of assets.
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Prime brokers, usually large banks, make money from hedge funds by providing services such as stock lending, financing and trade execution.
Credit Suisse, which counts European hedge fund giant Brevan Howard as a key client, is in second place with $200 billion of assets.
The survey gives an insight into a sector which, in some cases, has seen profits plunge as funds rein in their use of debt in investment strategies and brokers themselves face higher financing and regulatory costs.
While a share of business from the biggest traders, for instance Brevan Howard or Moore Capital, can deliver tens of millions of dollars in commissions, brokers are finding some clients unprofitable and are sometimes demanding higher fees, a greater share of business or even telling them to look elsewhere.
The survey puts JPMorgan third in the global prime brokerage market with $187 billion in assets. JP Morgan's strength in the United States owes much to its purchase of Bear Stearns' prime broking business and expansion in Europe and Asia.
Morgan Stanley is fourth with $163 billion, although it ranks second in terms of total number of mandates.
UBS and Deutsche Bank are the other two brokers with more than $100 billion in assets, while Citi, Barclays Capital and Bank of America Merrill Lynch are all just under the $60 billion mark.
Gathering accurate data on the hedge fund industry is notoriously difficult and the findings of prime broker surveys are sometimes questioned by banks.
HFI says that its data is based on information reported by hedge funds, as well as research on new funds and SEC filings.
It then typically divides assets evenly among the named prime brokers, although it admits this method can flatter some banks and make others look less important than they are. Hedge funds rarely split their business evenly between brokers.
It also says that, for instance, Barclays Capital has focused on building synthetic prime brokerage relationships -which focus on providing equity swaps to clients rather than traditional stock lending - that aren't reflected in the figures.
(Reporting by Laurence Fletcher; Editing by Mark Potter)