Even before the ink dries on Intel Corp.'s intc March 8 settlement with the Federal Trade Commission (FTC), involving the chipmaker's alleged use of its monopoly power to leverage trade secrets from its customers, the company is facing yet another attack.
Prime brokers, typically arms of (regulated) investment banks, provide hedge funds with a range of services, including securities lending, leveraged-trade transactions, and cash management.
It may sound like a dating website, but Match Australia is a business initiative that leverages trade opportunities off the back of international sporting events.
Eager to serve such customers, most big banks have established "prime-brokerage" arms that offer hedge funds a range of services, including securities lending, leveraged-trade executions, cash management and even computer systems if they need it.In a recent report Morgan Stanley reckoned that revenues from prime brokerage at big investment banks surged by 29% last year, to $5.2 billion.
It should insist on total transparency on strategies, costs, leverage and trading.
Moreover, the banks that lend to them and the brokers that allow them to leverage their trading positions all have a keen interest in knowing their customers.Keeping watchSuch a hands-off approach will look awfully complacent when a big hedge fund blows up, or when some hedge-fund scandal hurts small investors.
These moves are being seen as a gradual shift to a new business model, as banks adapt to a climate of tougher regulation forcing them to reduce leverage, lower trading volumes, growing competition from the likes of hedge funds and private equity firms, and increased public scrutiny.
Foreign exchange markets give investors a lot of leverage when trading.
Mr. Holmer, an international trade lawyer, said the United States should use its leverage in trade negotiations to challenge this practice.
"We want Congress to keep its leverage over trade negotiations, not rubber-stamp a deal that delivers profits for global corporations, but not... jobs for working people".
