COO Connect – Alternative sources of hedge fund financing could emerge as prime brokers scale back their financing as banks seek to meet their Basel III capital requirements.
Papers published by both Citi and J.P. Morgan in 2014 highlighted attempts by prime brokers to reduce their dependency on short-term funding, hedge fund investor restrictions on re-hypothecation of collateral and Basel III capital requirements are all going to lead to an increase in the cost of financing.
