Prime broking in Asia finds new equilibrium
The prime broking business in Asia has found a new equilibrium following panic in the markets after the collapse of Lehman Brothers. Hedge funds are once more focusing on operational risks and access to leverage, with concerns about counterparty credit risk being less of a priority. But the shake-up has allowed new participants to emerge. Georgina Lee reports
As fear gripped the financial markets in the immediate aftermath of the collapse of Lehman Brothers in 2008, hedge funds in Asia placed an extreme premium on the counterparty risk of their prime brokers. Their overriding concern was that their assets would not inadvertently get caught up in any bankruptcy proceedings, as had occurred with the billions of dollars linked with Lehman Brothers accounts, at a time when they faced an unprecedented volume of redemptions.
As a result, they forged a raft
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