CCP will not isolate prime broker, says Deutsche Bank's Sofoluwe

Prime brokers will not be bypassed if a central counterparty is introduced, according to the head of European securities lending at Deutsche Bank.

Speaking on a panel at the second Global Securities Lending Summit in London, Ben Sofoluwe said that if a central exchange were introduced to the stock lending market hedge funds would still seek the multiple services that a prime broker offers rather than going to the exchange directly.

The point was raised amid a wider discussion of a central counterparty and other changes that may occur in the securities lending market. Peter Fenichel, CEO of SecFinex, which is to launch its first central counterparty offering next month to the Euronext markets, emphasised the transparency and reduction of counterparty risk of such an exchange. He added that a CCP would also help standardise the industry as it emerges into a more formalised, front office activity.