Hedge fund servicers emerge from the storm

In many ways, the global financial crisis has been good for the many companies that sell hedge fund services. Third party administrators have certainly benefitted, as their services are being demanded by end investors. Prime brokerages, technology vendors and the like are also sensing that the worst is over. And as regulations take shape, administration, compliance, custody and reporting specialists are poised to fare well.

But Hedgeweek notes that the power pendulum may be shifting in favor of funds. Funds have "emerged from the financial crisis a lot more cost-conscious, and are driving harder bargains." One example of this of course is prime broking. The trend toward multiple primes was started even before the crisis hit, and it will continue now that the crisis is over. Funds certainly want options and are willing to play prime brokers off one another. New regulations may also hit prime brokers.

To be sure, there is great opportunity across the board, especially for administrators or any firm that plays the risk management function. Still, for a few years, we may see more margin compression at many hedge fund technology and service vendors. 

For more:
- here's the Hedgeweek article

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