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HedgeCo.Net \u2014 Barclays has moved capital out of its macro rates trading business to expand lending to hedge fund clients in Asia after hitting internal financing limits during a surge in artificial intelligence stocks, Bloomberg reported. The bank used an internal auction to transfer balance sheet capacity from rates traders to its prime financing business, allowing it to take on more demand from leveraged funds seeking exposure to Asian technology shares.<\/p>\n
According to the report, Barclays had reached its maximum financing limits for Asian hedge fund clients over the summer, prompting executives in its global markets division, led by Adeel Khan, to prioritize capital for higher-returning activities. The bank also encouraged some clients to add short positions to reduce their net financing needs, an approach Goldman Sachs has used as well, according to people familiar with the matter.<\/p>\n
The shift reflects how central prime brokerage has become to bank equities revenue. Analysts expect Barclays’ equities division to report third-quarter revenue of about \u00a3865 million, or $1.2 billion, which could be its strongest third quarter since at least 2009, according to estimates compiled by Bloomberg. Separately, CNBC reported that Goldman Sachs, Morgan Stanley and JPMorgan captured nearly 80% of equity trading revenue among the top five banks so far this year, a combined $52 billion, driven by hedge fund borrowing for leveraged bets on AI hardware and Asian semiconductor supply chains.<\/p>\n
Balance sheet remains the binding constraint. Goldman said earlier this month that demand for equities financing continued to outstrip industry supply, supporting pricing and letting it be selective, and UBS has said it is allocating its equities balance sheet more selectively to support prime brokerage. The risks are concentrated: several hedge funds took significant losses when AI-related stocks fell in July, and Bloomberg reported that Barclays had previously declined to onboard one AI-focused fund over concentration concerns.<\/p>\n
For managers, the practical effect is that financing capacity, and its price, is being rationed toward clients and strategies banks consider most profitable. Funds running concentrated long books in Asian technology may find that access depends as much on how much short exposure they carry as on the size of their relationship.<\/p>\n","protected":false},"excerpt":{"rendered":"
HedgeCo.Net \u2014 Barclays has moved capital out of its macro rates trading business to expand lending to hedge fund clients in Asia after hitting internal financing limits during a su\u2026 Continue reading