Global Custodian Hedge Fund Annual 2018 | Page 90

[ S U R V E Y | P R I M E B R O K E R A G E ] Societe Generale Weighted average scores 2016 5.79 2016 2017 2018 2017 5.22 5.79 5.22 5.47 2018 is interested 5.47 in managers of all types and sizes). One respond- I n theory, Societe Generale Prime Services combines the ent with experience of the capital introductions team is clearly financing capacity of a global bank with expertise of a global profile unhappy, but the average score suggests he is not alone. derivatives broker. It ought to offer prime clearing as well as Respondent Small fund prime brokerage, with commensurate scope to win business 44% managers through skilful cross-margining. The prime clearing component 6% Medium- looks to be in rude health, with Weighted excellent scores for both swap sized fund 50% average clearing and futures. “We are happy with the many exchanges managers 44% scores and products available to us through Large fund 2017 2016 SG,” writes 5.79 a user of the 2016 2018 6% 50% exchange-traded derivative services, 2017 which range 5.22 across more managers 5.79 5.22 5.47 PROFILE OF RESPONDENTS Americas 22% than 125 markets. A client thinks both the fixed income and 2018 5.47 foreign exchange services are expensive (“The pricing for this Europe and 61% service is off market,” he says of Respondent both), and profile the score in neither Middle East By size By location Asia 17% Small fund field is strong. A respondent adds that he “would 44% like to see Soc managers Gen use CLS for clearing of some of the non-vanilla FX curren- 6% scores by service area Weighted average 17% 22% cies that do clear through CLS.” Medium- On the financing side, there is 50% sized fund Americas Large praise for the way in which Societe Generale helps clients write Weighted 44% +/- the managers Europe and more business. “The risk team understands our business well Service area average Medium global Large fund 6% Middle East 50% and works closely with us to set managers appropriate limits for our activi- score average Small Asia ty,” says one respondent. Capital Americas 22% 61% 4.99 -7.0% But there is no persuasive evidence Europe in and the detailed scores that introduction 61% s Middle Societe Generale is saving clients cash East or collateral through Asia 17% better-informed margin management. “Sometimes we need to Client 5.82 -3.2% point out parts of our portfolio that should be offset for VaR and service 10.6% average scores by service area Consulting 17% 6.48 margi n purposes so that we get Weighted better offsets and credits,” writes 22% Weighted average Operations 5.75 scores -3.7% a client. “It feels like we are doing the job for this team at times.” Technology 5.05 -9.8% Weighted +/- the 2016 2017 2018 This may reflect technological shortcomings. The bank global does not Service area average Product 5.79 5.22 5.47 score well for technology. One client describes the technology 4.91 -9.9% score average development as “really `80s – poor and unreliable.” Capital Another notes that “until 61% [a] couple of years, we are waiting for the close-out into -7.0% the 4.99 introduction Risk 5.20 scores by -6.7% [proprietary reporting] platform s [Newedge] Pulse.” Even a third Weighted average service area management Client and direct access does an client, who says, “The IT connectivity 5.82 -3.2% Service area Weighted average +/- the global service data issues. On the people Asset safety 5.60 -2.4% excellent job for us,” has experienced score average Consulting 10.6% Sales and side, there is evidence of turnover. One client 6.48 name-checks 6.13 0.0% Operations 5.75 -3.7% Capital introductions 4.99 -7.0% his current reps for doing “a great job servicing our account,” marketing Trading Client and service -9.8% 5.82 -3.2% 5.22 -10.9% but admits he still misses others Technology who “looked 5.05 after our needs execution in their respective divisions.” In Product operations, which is not the Consulting 6.48 10.6% 4.91 -9.9% development highest-scoring area for the bank, a client has noticed improve- Operations 5.75 -3.7% ment. “There was a period where they were under-staffed, and it Risk Technology 5.05 -9.8% was frustrating because we had many operational 5.20 problems -6.7% that took a long time to get resolved,” management he writes. “Things are better Product development 4.91 -9.9% Asset safety where 5.60 we were -2.4% un- lately. There was a period of staff turnover Risk management 5.20 -6.7% Sales and problems. We considered der-served, and we had many clearing 6.13 0.0% Asset safety 5.60 -2.4% marketing moving our business at that time. Things are better now.” Trading and Sales and marketing 6.13 0.0% All of that said, Societe Generale is scoring well 5.22 for client -10.9% service, though one respondent execution has noticed promises outweigh Trading and execution 5.22 -10.9% delivery. “They try hard for us and are responsive,” he writes. Delta 1, swaps and financing 5.51 -3.7% “But it does take a long time to get approvals for new products/ Stock borrowing and lending 5.32 -10.9% services from senior management.” This helps account for the Foreign exchange prime brokerage 4.86 -14.2% weaker score in product development (where prime brokers are assessed on the creativity of their solutions to client problems). Fixed income 4.98 -13.7% Societe Generale will also want to do better in stock borrowing OTC clearing 6.21 6.2% (where it has in theory got access to a massive global inventory, Listed derivatives 5.95 1.1% particularly on the equity side) and capital introductions (which matters because Societe Generale, unlike many prime brokers, Total 5.47 -5.7% 90 Global Custodian The Hedge Fund Annual 2018