OTC MARKET NEWS Powered By Quantifi

JPMorgan Explains Basel III Impact On Hedge Funds 

August 11, 2014
Michael Ide, ValueWalk

New regulations force banks to reevaluate their business lines and raise financing costs for many common hedge fund strategies.

Just a few days after finding out that Goldman Sachs Group Inc is scaling back its prime brokerage services to hedge funds, JPMorgan has released a white paper breaking down the impact of Basel III regulation on the prime brokerage business and why hedge fund managers should expect serious changes in their business relationships over the next couple of years, the report is titled “Leveraging the Leverage Ratio - Basel III, Leverage and the Hedge Fund-Prime Broker  Relationship through 2014 and Beyond”.

“Although the reforms will change the way banks operate, those changes indirectly impact the traditional hedge fund financing model which has relied, almost exclusively, on their prime broker’s ability to finance their portfolios as financial intermediary,” says the JPMorgan report. “Structural challenges to the prime brokerage financing model are, in effect, structural challenges to the hedge fund financing model.”

Read more: Value Walk

 
Comments are closed on this post.

Subscribe

Submit your email to receive our newsletter

GO