Japan's Nomura Holdings plans to launch a global prime brokerage business by September as the financial crisis has created room for new players to serve hedge funds, a senior executive said on Monday.
We think prime brokerage is a very interesting opportunity because of what happened in the industry this past year, Siggi Thorkelsson, Nomura's head of equities Asia-Pacific, told Reuters in an interview.
Prime brokerages offer services such as clearing, securities lending and financing for assets to hedge funds. Banks such as Goldman Sachs and Morgan Stanley have historically dominated the business.
Thorkelsson said Nomura historically has not been present in the prime broking space.
It used to the case that the barriers to entry were very high as there were a couple of firms that dominated the market. Now those firms have lost a lot of the market share and there's market share to be gained there, he said.
The hedge fund industry suffered record redemptions last year, fuelled by weak performance exacerbated by a meltdown in financial markets last fall.
The tide seems to have turned there. There are have been a number of firms that have done extremely well and those hedge funds will be the biggest beneficiaries of a less crowded market place in the coming years, Thorkelsson said.
Nomura, which took over the European, Middle Eastern and Asian units of bankrupt Lehman Brothers, is also looking to increase its market share in Asia in electronic trading, derivatives and convertible securities.
Our ambition for Asia is to be in the top three to five in terms market share and we are not there yet, Thorkelsson said, adding the firm is in the top 10.
Currently Asia excluding Japan accounts for 30 percent of its Asia-Pacific equities business and the firm plans to grow that share to 50 percent in one and half years, he said. He did not provide figures.
Most important markets for us in the medium-to-long term are China and India and in the immediate term, Hong Kong and Singapore are the main areas of focus.
(Reporting by Saeed Azhar; Editing by Muralikumar Anantharaman)