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Bank of America Merrill Lynch
This is not the sort of outcome the BAML prime brokerage group enjoyed 12 months ago . Scores and comments indicate clients still like the parentage (“ Counterparty has great credit quality ”), and the score for asset safety is correspondingly high . Yet only in listed derivatives is BAML able to conjure a comparable degree of enthusiasm . Nevertheless , BAML continues to impress in trading and execution – although for some reason operations have failed to keep pace . “ Operations services [ sic ] is good ,” says a client , but the average score is bad . One client has the “ impression that more European equities trades fail than at other PBs .” Sustaining clients ’ short positions is less problematic . In pre-crisis days , Merrill Lynch earned a formidable reputation in stock borrowing , thanks to a high rate of internalisation that kept supply steady , and that strength has not wilted . Even now , access to streams of lendable assets minimises recalls , finds hard-to-borrows and supports term transactions . To these traditional strengths , BAML has added a commendable degree of transparency into pricing . So it is not surprising to find the bank top-scoring in securities borrowing and lending . However , across all the associated equity and synthetic financing areas – in Delta 1 , swaps and financing and foreign exchange prime brokerage – there is less positive momentum . Clients want to see better-integrated financing across the asset classes , including more valuable cross-margining and cross-netting opportunities , although these are not fields in which prime brokers are ever likely to satisfy clients all of the time . One BAML client concedes as much . “ OTC / listed commodity option [ s ] are one of the product [ s ] that PBs generally perform less satisfactorily ,” he writes . “ They cannot offer cross-margining with overall portfolio ; strategic parting of legs [ is ] not married with howit – should-be margin ; mark-to-market and delta data delivery are not robust . Most of bulk matching and settlement platform do not support this product as well .” As it happens , collecting and delivering data for cross-margining purposes is not the only field in which clients would like to see BAML invest . The bank did recently update its portal to provide managers with readier access to data across futures as well as equities and fixed income , but clearly it has not yet reached every client . “ Portal is awful ,” says a client . “ One of the worst portals in the financial services sector .” The client servicing model , which hinges on a global and multi-asset class team that works together across 65 markets mainly from New York , London and Asia , does win plaudits . An individual is namechecked , because he is “ very good at his job , always helping out in any way possible .” Another respondent is experiencing “ excellent client service coverage from BAML .” The team as a whole earns praise for doing “ an amazing job ” at a time of considerable turnover within the BAML prime brokerage group – an issue evident last year that has persisted into 2018 . Capital introductions , a good area for BAML in 2017 , has turned sour this year for exactly that reason . “ Turnover within team has been exceptionally high ,” explains a respondent . Inevitably – perceptions tend to divide neatly along a line that separates the successful capital raisers from the unsuccessful – not everyone agrees with the average verdict . One client insists the BAML capital introductions team is still “ top tier .” Consulting , where the bank has maintained a service to start-ups as well as established managers , is another area where the scoring reflects perceptions of turnover .
18 %
43 %
By size
39 %
Weighted average scores
PROFILE OF RESPONDENTS
Large Medium Small
Weighted average scores by service area Service area
25 %
22 %
By location
2016 2017 2018 5.63 5.65 5.10
Weighted average score
Capital introductions 5.00 -6.9 %
53 %
Americas Europe and Middle East Asia
+/ - the global average
Client service 5.00 -16.8 % Consulting 4.78 -18.4 % Operations 4.62 -22.6 % Technology 4.90 -12.5 % Product development 4.02 -26.2 % Risk management 4.97 -10.8 % Asset safety 5.23 -8.8 % Sales and marketing 5.26 -14.3 % Trading and execution 5.34 -8.7 % Delta 1 , swaps and financing 4.97 -13.2 % Stock borrowing and lending 5.51 -7.8 % Foreign exchange prime brokerage 4.93 -13.0 % Fixed income 4.43 -23.2 % OTC clearing 5.06 -13.6 % Listed derivatives 5.99 1.7 % Total 5.10 -12.1 %
The Hedge Fund Annual 2018 globalcustodian . com 75