One of the largest banks in North America is developing its prime services for hedge funds as global equity markets pick up. The New York headquartered bank has received approval from the US banking regulator, Financial Industry Regulatory Authority (FINRA) to provide self-clearing facilities for its prime clients. The move follows on from Wells Fargo’s entrance into the prime services market two years back.
Wells Fargo’s new solution allows it to strengthen its product offering for buy-side members. The bank’s investment banking arm will provide self-clearing capabilities to users.
Wells Fargo is offering a number of products under its prime services division that support the needs of hedge funds and asset managers, including; Securities lending, Custody services, Margin financing, Capital Introduction and Reporting.
Eamon McCooey, Head of Wells Fargo Securities’ Prime Services, commented about the new service in a statement: “We are committed to offering clients the full breadth of resources and solutions that can help them adapt to this evolving landscape.”
The firm first dipped its toes in the hedge fund world in 2012 when it acquired introducing broker, Merlin Securities, the regulated firm specializing in small to mid-tier funds with AUM of $2 billion or less. During the same year, Wells Fargo launched its new FX trading terminal that was developed by Integral.
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As the bank migrates its offerings to users, it stated that it will continue to offer introducing prime brokerage services in addition to its full prime brokerage platform, including; financing capabilities, securities lending, custody and clearing services, fund administration, middle and back office support, capital introduction, futures execution, exchange trade and OTC derivatives.
“By adding our self-clearing capabilities as well as maintaining our introducing broker model, we are taking the next thoughtful step in building out our prime services platform. These new capabilities fit within the strong risk infrastructure run by our experienced compliance and risk team members who ensure all regulatory requirements are met,” added Mr. McCooey.
The geopolitically affected global markets landscape has been scarred with disturbing news that has been impacting the markets. However, since the US reduced its bond-buying program equity markets have been flourishing.
According to hedge fund research firm, Barclays Hedge, the total value of assets under management as of 2nd Quarter 2014, for the hedge fund industry was $2352.6 billion, and the managed futures (CTA) industry was $319.5 billion.
FX hedge funds saw positive gains in May and June, the benchmark, Parker FX Index was up 0.66% in May and the Barclays Hedge Index saw gains in the month of June.