23/11/2011 Author: Elana Margulies

Jefferies restructures prime brokerage unit

Jefferies Group, the investment bank that has been in the spotlight in recent weeks following the collapse of MF Global and its own ratings downgrade, is combining its prime brokerage division and securities lending unit, HFMWeek.com exclusively revealed this week.  

Glen Dailey, global head of prime brokerage, confirmed that he would still remain in the same role, while Matthew Baldassano would continue as global head of securities finance.   

Jefferies Prime Brokerage has also been moving a number of its hedge fund accounts over to its larger clearing broker counterparty JP Morgan, after it gave clients the option of where to custody their assets.  

According to sources, JP Morgan has seen an increase in the number of hedge fund accounts it holds, after Jefferies moved a number over to the bank's clearing and custody group. As a result, it has migrated billions of dollars over and expects that to continue.

“Many hedge funds and their investors have decided to no longer custody with relatively small self-clearing firms that conduct proprietary trading and principal trading businesses, to avoid risk on risk,” said Ron Suber, senior partner at Merlin Securities. “Many of these mid-sized firms now also clear through JP Morgan and Goldman and have thus became re-structured as introducing brokers to hedge funds.”