CFH Clearing a leading prime of prime (PoP) has selected a new prime broker as the firm undergoes a spiral of changes that reflect the direction of its business. The FCA regulated firm that is part of the CFH Group, has appointed Bank of America Merrill Lynch to operate alongside UBS who predominantly covers its precious metals pricing and liquidity.
CFH Clearing’s two main prime brokers were Morgan Stanley and UBS as stated on their website, the firm underwent a strict assessment on prime brokers as a replacement for Morgan Stanley and eventually chose Bank of America Merrill Lynch due to its ‘strong service model, competitive pricing and speed in which it on-boards were particularly impressive,’ according to CFH Clearing as mentioned in the official briefing.
In a statement to the media, CEO and Co-Founder of CFH Clearing, Lars Holst explained: “Our recent name change from CFH Markets to CFH Clearing now reflects our business model as an interbank prime of prime solutions provider. Our new relationship with Bank of America Merrill Lynch, combined with our open and flexible technology, allows us to give the smaller to medium sized institutional customer a full front to back solution with excellent and diverse liquidity.”
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After the global recession of 2008 large institutions were forced to examine their prime brokerage relationships, the one to one approach was far too risky as shown by the demise of Lehman’s and AIG. Hedge funds and institutions were looking at one or two primary prime brokers in a bid to diversify and manage their portfolios. This opened up opportunity for banks to enter the FXPB space. FXPB’s face a new wave of issues in respect of Dodd Frank and centralised clearing.
CFH Clearing positions itself as a broker neutral, platform agnostic firm that offers a wide variety of trading platforms for its clients. The firm offers; MetaTrader 4, tradable, ACT Forex, CFH Pro and Vertex 10.
The interbank, pure agency trading model has contributed to the growth and development of the prime of prime product, in essence it sits on a level below traditional prime brokerage services but adds a layer of flexibility for the specific needs of firms such as retail aggregators in respect of leverage and ticket size. The PoP sector is expected to grow as FX brokers look at methods to offset risk and provide a value add service for traders.
Recent reports in certain media publications were stating that Morgan Stanley was shutting down its FXPB division. Forex magnates was in touch with Mark Lane a spokesperson for the bank who said: “After an extensive review, Morgan Stanley is fully committed to a more focused and streamlined FXPB business that will draw on the Firm’s market-leading technology platform, intellectual capital and top-tier prime brokerage relationships to differentiate our offering.”