Many Happy Returns (On Assets)

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Citigroup’s Prime Services Consulting group’s white paper that came out in the early summer (Opportunities and Challenges for Hedge Funds in the Coming Era of Optimization) is the best paper yet on the impact of the new regulations on prime broker profitability and hedge fund return on assets (ROA). These new regulations, especially those affecting, liquidity and leverage, are having a significant impact on the profitability of the prime brokerage business.  The initial response by the prime brokers has been to raise prices for their services and consider off boarding less profitable clients.

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New Product Announcement: CP Accelerator

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Pangaea Business Solutions announces the release of CP Accelerator.  It is important that every hedge fund have a framework for managing counterparty risk. It must also be sized to your organization and your capacity. CP Acclerator is a quick, cost-effective way for a hedge fund to develop this initial framework for their counterparty risk management process. This product includes the following:

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50 Shades of Counterparty Risk

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What follows isn’t going be quite as racy as the books (I hear) from which I paraphrase the title for this essay. However I will be offering up some suggestions to help you not get tied up by your counterparties. At times many people in the industry, myself included, tend to only view counterparty risk as some cataclysmic event like 2008. Markets in turmoil, banks failing or on the brink and a general global crisis. But the absence of such an environment or market condition does not mean an absence of counterparty risk – just an absence of that particular kind of counterparty risk.

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