Global Custodian Hedge Fund Annual 2018 | Page 93

Fidelity Prime Services Global Prime Partners

This is a formidable performance by Fidelity . The firm clears the benchmarks with ease in every service area that matters . In the core service of stock borrowing and lending , it gets the best score in the survey . At one level , this is a predictable triumph , since Fidelity has access to one of the largest ( and broadest ) collections of captive securities available . Certainly , the detailed scores suggest that clients believe the pool is liquid enough to protect them from recalls . But the score is also a tribute to the efforts Fidelity has made to increase transparency in the securities borrowing markets through PB Optimize , a cloud-based service that aggregates the cash and synthetic financing activities of its clients , and provides intelligence on potentially awkward risks and opportunities , such as upcoming corporate actions . Importantly , detailed scores also reveal a level of satisfaction with the associated margin financing available from Fidelity that is less evident at the service area level . Capital introductions , which was an issue last year , has improved markedly . Though it is a notoriously fickle service area – the score would be even better if more clients felt they were invited to multi-manager events – Fidelity does have tremendous distribution power through in-house channels such as Fidelity Family Office Services and the Fidelity Charitable Gift Fund . Another field in which Fidelity can leverage its networks is execution . Fidelity Capital Markets ( FCM ) offers electronic and algorithmic execution and an anonymous crossing network for domestic equities , and in international equities trades on more than 90 execution venues in 46 countries . The score for execution is reassuringly robust . While Fidelity would probably not describe it as FX prime brokerage , the currency trading services available through Fidelity FOREX are judged to be perfect . One further benefit of working with Fidelity is also buried in the detail . Clients like Fidelity as a counterparty – because it is not a bank , or publicly owned .

GPP has benefited from the upheaval in the traditional prime brokerage industry , taking on managers as the major prime brokers shed their less profitable clients . This has driven rapid growth at the firm . GPP currently has around 230 clients , of which 75 are hedge fund managers , so its prime services client base has grown by half since last year . It has added people , and now employs 50 in London and 10 in Hong Kong , plus 30 technology and support staff in Cape Town . But growth has not diluted the ambition of the founders to stay close to clients . “ Overall very happy with the level of client service ,” writes one of them . “ GPP are very responsive and tend to resolve issues swiftly .” It is a model which also appeals to new entrants . “ As a start-up hedge fund , we wanted a service provider who were accessible to us , could support us as we grow , and provide the level of support and service needed ,” writes one client , explaining why he chose GPP . “ We felt access to client service personnel was important to us .” By working with Nomura and Macquarie as counterparties , clearing transactions with BNP Paribas , and placing client assets in custody with BNY Mellon , GPP is able to go beyond the human side and offer financing , futures clearing and asset safety . “ Best and most cost-efficient service for low volume users ,” is how one respondent describes his access to the futures markets . GPP also has a partnership in place in capital introductions . Last summer it joined forces with Edgefolio , which uses technology to connect managers and investors . Scores and comments (“ would be nice if GPP would offer that actively ”) suggest the relationship has yet to make an impact , but capital introduction is a notoriously difficult area in which to shine . GPP is doing much better in trading and execution and operations , where it has control over the outcome . “ Always found GPP ops staff to be very good ,” notes a client .