WHEN PRIME BROKERS FAIL: The Unheeded Risk to Hedge Funds, Banks, and the Financial Industry: 92 (Bloomberg) - Hardcover

Aikman, J. S.

Hardcover

ISBN 10: 1576603555 ISBN 13: 9781576603550

Publisher: Kogan Page, 2010

Synopsis

An informative primer on the new landscape of leading prime brokers

Before the recent financial crisis, both regulators and market participants disregarded the complex and dangerous nature of the relationship between prime brokers (the banks) and their clients (the funds). In When Prime Brokers Fail, J. S. Aikman examines the convoluted structure of this relationship, the main participants, and the impact of the near collapse of prime brokerages on the financial world.

Filled with in-depth insights and expert advice, When Prime Brokers Fail takes a close look at the unheeded risks of prime finance and lays out the steps required for managers to protect their funds and bankers to protect their brokerages.

• Examines the challenges, trends, and risks within the prime brokerage space
• Discusses the structural adjustments firms will need to make to avoid similar disasters
• Analyzes the complex relationship between hedge funds and their brokerages and the risks that multiply in extraordinary markets
• Covers new ways to manage an inherently risky business and the regulations that may soon be introduced into this arena

Engaging and informative, this timely book details the intricacies and interdependencies of prime brokerages and the role that these operations play in our increasingly dynamic financial system.

About this title

About the Author

J. S. Aikman is a consultant and lawyer advising managers and financial institutions. He also lectures on finance, including hedge funds and investment banking at the University of Toronto. Previously VP and Counsel for a bulge-bracket investment bank in London, U.K., Aikman has broad international experience in alternative investments. Aikman completed his MBA at Oxford University.

He may be reached at ja@jsaikman.com.

From the Back Cover

Praise for When Prime Brokers Fail

"An essential guide to understanding why so many hedge funds failed during the 2008 crash and why so many will continue to fail in the future."
—François Lhabitant, PhD Chief Investment Officer, Kedge Capital Professor of Finance, EDHEC Business School

"A must-read for every hedge fund manager, investment banking executive, and prime brokerage professional. This is hands down the most educational resource on the challenges, trends, and risks within the prime brokerage space."
—Richard Wilson, founder of the Prime Brokerage Association and PrimeBrokerageGuide.com

"Aikman does a masterful job of examining and explaining the intricacies and interdependencies of prime brokerages and the role that these operations play in our increasingly complex financial system."
—Peter J. Shippen, CFA, CAIA President, Redwood Asset Management Inc.

The New Dangers of Prime Finance

In this revealing book, J. S. Aikman takes a detailed and thorough look at the complex relationship between hedge funds and their brokerages and the risks that multiply in extraordinary markets. Before the credit crash, the inextricable relationship between banks and brokers was a little-known risk for both parties. When troubles loom large, the unraveling of these tightly wound affiliations can seriously damage both organizations and induce systemic financial collapse. When Prime Brokers Fail takes a close look at the unheeded risks of prime finance and lays out the steps required for managers to protect their funds and bankers to protect their brokerages.

From the Inside Flap

Managing New Risk in a New World

"Whether you have been in the business for twenty years or are just interested in how the machine really works, Aikman's book is a must-have."
―Stephen Burns, Director of Electronic Equity Trading, Wellington West Capital Markets

The collapse and sale of Bear Stearns in 2008 marked the beginning of a series of failures of financial institutions in what was to be the worst financial crisis since the Great Depression. Only a few months later came the bankruptcy of Lehman Brothers.

Prime brokerages attached to each of these investment banks were caught in a difficult position as clients―mostly hedge funds and institutional firms―attempted to withdraw and reclaim any assets stored at the failing firms. Many were unable to do so, and while assets were held in abeyance during bankruptcy proceedings, hedge funds struggled to manage increasingly risky and overleveraged bets with less liquid capital.

Before the crisis, both regulators and market participants disregarded the complex and dangerous nature of the relationship between prime brokers (the banks) and their clients (the funds). In When Prime Brokers Fail, J. S. Aikman examines the convoluted structure of this relationship, the main participants, and the impact of the near collapse of prime brokerages on the financial world. He also covers new ways to manage an inherently risky business, the structural adjustments firms will need to make to avoid similar disasters, and the inevitable regulation.

Edition details

• Publisher: Kogan Page
• Publication date: 2010
• Language: English
• ISBN 10: 1576603555
• ISBN 13: 9781576603550
• Binding: Hardcover
• Edition number: 1
• Number of pages: 304