JPMorgan Chase & Co.(JPM) announced the launch of its prime brokerage service in Europe that will cater to the needs of various hedge funds based in Europe, Africa and the Middle East. The launch of the brokerage platform reflects the company’s strategy to provide a wide range of products and services to hedge funds worldwide.
JPM now has a complete set of local infrastructure in place to offer a full suite of products to both the international and regional customers. With the launch of this service, the international clients will be able to utilize JPM’s broad range of services including securities lending, equity financing, settlement and clearing.
One of the priorities of JPM is to develop and expand its business of clearing trades and lending money to big hedge funds. The company has been working hard to gain market share in this lucrative field. JPM has a huge pipeline of new and existing clients that are willing to utilize the company’s services. In Europe alone, the company plans to add around 15 new hedge fund clients this year.
Additionally, JPM has also included about a dozen of senior people including Mr. Christian Erickson who will be the head of new Client Experience unit globally. Apart from him, the company has hired several other experienced personals in Europe – Mr. Brian Bisesi, as the Sales head for prime brokerage and Mr. Kumar Panja, who would head Strategic Consulting.
It has been three years since JPM started its brokerage service in the U.S. after the acquisition of Bears Stearns in March 2008. Since then the company has been investing and integrating its platform to enhance its market share. The company already deals with fund managers who oversee nearly 70% of the total hedge fund industry’s $2 billion assets.
Earlier, prime brokerage servicing sector was mostly dominated by Goldman Sachs Group, Inc. (GS) and Morgan Stanley (MS) in the U.S. and Credit Suisse Group (CS) in Europe. However, following the financial crisis, many big banking companies with large resources started to invest in infrastructure that was needed to participate in that sector. Now with the launch of its prime brokerage business, JPM also joins the league of these long time leaders.
Shares of JPM currently retain the Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. Also, considering the fundamentals, we maintain a long-term “Neutral” recommendation on the shares.
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