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The Rise of the Boutique Prime Broker in the GCC

 3 min read / 

The GCC has been subject to a constantly evolving business environment in recent years, with Tier 1 banks trimming down services and only offering those services to a select clientele. In addition, new global regulations such as Basel III are putting heightened pressure on asset managers. The regulatory requirements which mandate increased levels of capital as well as increased reporting responsibilities have left some prime brokers reassessing where to direct their resources. As a result, fewer asset owners are using multiple prime brokers. As such, smaller niche players offering bespoke client services such as mini and boutique primes are entering the fray to cater for these smaller to mid-sized clients.

Some asset owners have experienced their current Tier 1 providers terminating services with little notice. This will drive asset owners towards providers who put their client service first. Many will make use of smaller, bespoke prime brokers. These smaller primes provide tailored bundled services that work for any type of asset owner. Alternatively, they may use a boutique prime to reassure investors they are spreading their risk as many large banks are becoming more reluctant to service these clients, who are not necessarily making enough trades through them.

The boutique broker provides credit services to firms who may no longer be able to access the Tier 1 banks. These brokers offer platform stability and some already work with a robust client base across the GCC. An integrated offering is aimed specifically at asset and wealth managers, family offices and broker/dealers and a one-stop solution for a client’s requirements for liquidity, technology and banking solutions is becoming increasingly popular. Linear Investment’s Middle East representative Tony Hallside commented:

“The market is changing, and Linear has been ahead of the curve for some time. Linear’s prime offering and global execution solutions are tailored to every client’s needs. Services include full cross asset class execution, margin financing, stock loan, custody and settlement, full middle and back office support and FX payment services. The fully serviced boutique prime broker provides a solution in the space the larger banks have left behind by presenting these services to a wide spectrum of asset owners.”

Utilising market leading technology with access to multiple clearers and custodians, the boutique prime broker can provide a fully outsourced middle & back office solution for brokers of any size, whether they are exchange members or non-members. Solutions are bespoke and can be taken in part or in total, all dependent on your requirements and needs, and fully managed by highly-experienced teams. They can provide access to most global equity markets and all key financial instruments, Equities, ETF’s Fixed Income, Futures, Options and all the structures needed to support these instruments – SWAPS/PB/Stock Loan and derivative instruments. Providing clients with global multi-asset execution services through both low touch (DMA, SOR & algorithmic trading) and high touch (manual, phone and desk orders) solutions, the new wave of the prime broker could be said to have it all.

The market has changed, and it is clear the boutique prime broker can offer both innovative and lucrative solutions to asset managers.

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