December 15, 2011, Financial News[br] [br] Cantor Fitzgerald intends to extend prime services into Europe next year following its successful launch of a US prime brokerage and clearing business in 2009. [br] Noel Kimmel, global head of prime services at Cantor, said: “We would like to provide the same services to Europe clients as we do in the US and also support our US clients as they increase trading in the region.”
Kimmel joined the company in 2009 to build the business. He had previously worked at JP Morgan as North American head of sales and marketing for fixed income prime brokerage. Before JP Morgan, Kimmel had been a senior managing director at Bear Stearns where he co-headed fixed income prime brokerage.
Cantor has developed its own technology platform for the business, which has 32 staff and was boosted when the nine-strong management team of prime broker PCS Dunbar Securities joined Cantor in February 2011. Further growth is expected in both the wwwuct range and staff numbers as it launches in Europe.
[br]Kimmel said Cantor Fitzgerald wanted to build a full service effort across asset classes targeting middle market client with funds of between $25m and $1bn. Cantor’s strategy is to win the role of the number one or two prime broker to those clients, rather than competing against the bulge bracket for the largest hedge funds or becoming a fund’s third or fourth prime broker.
[br]According to Kimmel, the number of middle market hedge funds is growing as traders leave banks to launch their own firms and funds shrink as the result of client outflows.
[br]Cantor Fitzgerald has more than 100 prime services clients but does not disclose assets under management. Kimmel said: “We are profitable and have been thrilled at the growth.”
[br]He added that prime services had been able to benefit from the expansion of Cantor Fitzgerald’s investment banking business. In total, Cantor Fitzgerald has hired more than 200 people since the start of this year, increasing staff numbers by 20%.
[br] Prime services can be capital intensive, but Cantor has the advantage not to face increased regulation and capital requirements due to hit rivals that are bank holding companies. [br] Kimmel said: “We are cautious and conservative in using our balance sheet and can protect the firm while achieving a high return. In general hedge funds are also less leveraged.” [br]