Hedge fund and money managers, always looking to boost returns, are focusing on sophisticated investing products and strategies and more are beginning to outsource some complex support tasks. Reaping the benefits of this are globally equipped custody banks, according to The Wall Street Journal.
Typically, custody banks provide services such as trade processing and clearing. As trades have become more global, these banks have moved deeper into the asset-servicing business, adding higher-margin activities to their traditional lower-margin custodial services. This includes offerings like foreign-exchange trading, short-term securities lending and fund accounting, states Rob Lee, a banking analyst at Keefe, Bruyette & Woods of New York.