Conifer Securities acquired by JonesTrading

People MovesPrime Brokerage
15 Aug, 2012

JonesTrading Institutional Services, a Los Angeles-based pure execution equity trading firm, is to acquire Conifer Securities, the prime brokerage business owned by the Conifer Group.

Another mini prime merger

The business will be managed as a wholly-owned subsidiary while the Conifer Group will obtain an equity stake in JonesTrading. Jack McDonald, president and CEO at the Conifer Group, will join JonesTrading’s board of directors. The deal is expected to close in the fourth quarter and no price was disclosed.

Mini primes or introducing brokers burst onto the scene in 2008 as hedge funds sought to diversify their counterparty risk following Lehman’s default and the near failure of several other investment banks. However, these businesses have struggled of late amid market volatility, low trading volumes and a decline in hedge fund start-ups.

Furthermore, several investment banks ceased providing clearing and custody services to mini primes having been forced to rein in their risk exposures. Mini primes have also suffered as institutional investors increasingly demand their hedge funds use brand-name brokers.

This is the latest merger in the mini-prime space. In August 2011, Concept Capital acquired Alaris following the latter’s abortive bid to merge with I.A Englander, the derivatives brokerage. Mid prime Merlin Securities was sold to Wells Fargo as the San Francisco-based bank seeks to expand its service offering to hedge funds, having acquired LaCrosse Global Fund Services in September 2011.

Last week, it was reported Momentum Trading Partners, another New York mini prime, had shut following a decline in trading volumes among its European clients.

Concept CapitalConifer SecuritiesMerlin Securitiesmini primesMomentum Trading PartnersWells Fargo