Earlier this year, Direct Access Partners LLC, an institutional agency-only brokerage firm, acquired the capital formation team of Channel Capital Group to beef up its new Global Prime Services operation. Now, DAP is continuing the industry-wide mini-prime brokerage consolidation by acquiring EFX Prime Services, formerly a division of First New York Securities. As a result of the acquisition, EFX Prime Services will no longer be a part of First New York Securities.
This second acquisition by DAP is aimed at providing hedge fund clients with an integrated capital introduction and capital raising platform, which the firm claims is a unique offering among correspondent prime brokers. DAP has offices in New York, Boston and Miami.
The deal integrates the EFX Prime Services team into Direct Access Partners including Brian Stutman joining as managing director, Andrew Saunders, who will lead the Capital Introduction program and, Geoff Webster who joins the Prime Operations Group.
“The addition of the EFX Prime team adds significant expertise, strong client relationships and a successful Capital Introduction program to our Global Prime effort,” stated Direct Access Partners CEO, Ben Chinea, in the release. “Working with our proven Capital Raising team, Direct Access Partners is optimally positioned to address the entire spectrum of hedge fund clients – including start-ups, emerging funds and established managers.”
Direct Access Partners Global Prime Services offers a single point of contact for both back-office operations and technology and allows clients to opt for either a single or multi-prime solution with what it considers as well-regarded custodians. Clients of the company are said to have access to various service offerings including multi-asset execution in over 100 global markets, independent research, corporate access, securities lending, capital introduction, capital raising and strategic business consulting.
This latest shakeout in the mini-prime brokerage industry follows closely on the heels of the closing of Lighthouse Financial in August. Several Lighthouse Financial employees and consultants have been indicted by a federal grand jury in Oregon for mortgage fraud. Goldman Sachs Execution and Clearing LP, embroiled in legal proceedings regarding its role in the Bayou Group bankruptcy, is rumored to be up for sale.
Observers note that the biggest beneficiaries of the mini-brokerage consolidation are self-clearing brokerage firms and trading platforms, which are insulated from the continuing turmoil in the industry.