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Hedge fund borrowing boom boosts Wall Street prime brokerage revenue

Coalition Greenwich projects equity and fixed-income prime brokerage revenues of $47.9 billion this year as borrowing from banks has tripled since 2020, according to a Financial Times report.

Reported · Written up by our desk · Hedge Funds

Hedge fund borrowing from banks has accelerated into a major revenue driver for Wall Street prime brokerage, with more hedge funds using lenders to finance trading strategies, according to coverage cited by Hedgeweek.

The Financial Times report says borrowing from banks has tripled since 2020, helping prime brokerage become one of the fastest-growing areas of the banking industry.

Coalition Greenwich projects equity and fixed-income prime brokerage revenues will reach $47.9 billion this year, as banks remain central to financing and securities lending even as some trading activity has shifted toward hedge funds and other market makers.

The shift is tied to post-2008 regulation that limited banks from running large speculative positions on their own balance sheets, pushing more risk-taking into non-bank trading firms.

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