RISK MANAGEMENT p. 4

Why sec lending needs new risk approach

TECHNOLOGY p. 8
AMQP standard ready for takeoff

OPERATIONS p. 9
Depositories bolstering back-office offerings

MARCH 2, 2009

MESSAGING p. 17

LSE preparing for Fast messages

Shifting Prime Relationships Burden Smaller Funds

Hedge funds adjusting to the new prime brokerage world

storied brokerage firms either became commercial banking companies or were acquired by one, effectively ending the era of high leverage. Providing leverage,

however, has been

SPECIAL

the prime brokers’

REPORT main source of rev-

enue. As lending tightened, bulge-bracket firms began reassessing the size and business priorities of their prime brokerage units and analyzing the profitability of their clients—and deciding what level of service to provide them.

When Nemesis Inflation Preservation Fund’s assets fell from a high of $150 million to

securitiesindustry.com
less than $100 million, Goldman

a SourceMedia brand Sachs said the fund could no longer be maintained on its prime brokerage platform, according to Mohammad Ahmad, COO and chief risk officer of

CONTINUEDON PAGE 14

By John Hintze

IT’S A DIFFICULT TIME TO be a small hedge fund. Many funds that manage less than $300 million have reportedly been shown the door by their prime brokerages, and others, even if they’ve generated positive returns, are now being charged for technology development and other services that once were free.

On the other hand, falling revenues may also be prompting prime brokers to deliver their services more efficiently.

Last year, Wall Street’s most

^CS^AT^SU^EDY

INSIDE KEY EQUINIX DATA CENTER

Equinix’s Secaucus, N.J. data facility--the largest in the New York metropolitan area--is getting even bigger as it prepares for an influx of cost-sensitive firms and trading venues such as the Chicago Board Options Exchange’s forthcoming East Coast platform.

FULL STORY ON PAGE 21

Will XBRL

Filings Produce Reliable Data?

By Tom Steinert-Threlkeld

AS OF JUNE 15, 500 OF THE largest U.S. companies will have to file their quarterly and annual reports in the extensible business reporting language (XBRL). The newly interactive filings are intended to supply investors with financial data more quickly and accurately, but there are concerns that high error rates and relaxed auditing requirements will lead to unreliable information.

The Securities and Exchange Commission in December approved rules that will, over the next three years, phase in mandatory filing by all public companies in the Web- and machine-friendly format. But Jeff Mahoney, general counsel for the Council of Institutional Investors in Washington, D.C., pointed to what the commission isn’t mandating.

“The SEC could have, but chose not to, require that the annual

CONTINUEDON PAGE 18

How TD Ameritrade Is Planning for Tomorrow

ONTHEWEB

By John McCormick and strategic project management MAN Y FINANCIAL FIRMS initiatives, is uniquely qualified to are struggling with today’s economic help lead the charge. Before his Sep-challenges. But TD Ameritrade isn’t tember promotion, Kelley was the just looking to get through these dif- firm’s chief information officer. Prior ficult days. According to COO Dave to joining the brokerage in 2006, Kelley, the online brokerage is laying Kelley spent 19 years at Merrill the groundwork—much of it with in- Lynch & Co. in a number of senior formation technology—to prosper management positions, including when conditions improve. controller for the national sales di-