This report is an analysis of equity prime brokerage revenue trends. It investigates hedge fund leverage and the potential impact of US capital relief for regulated banks, including a future possible exemption for US Treasuries in the Supplementary Leverage Ratio. The report should be read by any market participant engaged or impacted by the prime brokerage business. It may also provide a more informed understanding of market dynamics for counterparty or regulatory discussions.
Equity prime brokerage financing revenues have continued to rise through 2025, the result of increased hedge fund assets; leverage across securities lending, margin financing and swaps; and market volatility. Recent financial disclosures show that, if current trends hold, prime brokerage financing revenues will reach US$37 billion globally in 2025, an increase of 18% over 2024. This 2025 figure is also 23% higher than previous estimates focused only on the top prime brokers.
The leading prime brokers have excelled at financial resource optimization, collateral management, trade structure and inventory use, all of which have natural limits. Brokers report that many financing trades fit well into a Total Return Swaps (TRS) model while others should still be a securities or cash margin loan. The percentage of synthetics revenues has continued to rise through early 2025 but may be coming to a point of equilibrium.
On the client side, hedge fund leveraged trading behavior has sharply increased from 2024 to 2025, the result of volatility, albeit with periodic drawdowns as markets have reacted to each new twist. This is trading logic: hedge funds and other leveraged investors, including sovereign wealth funds and pensions, are taking opportunities as they come. For prime brokers, the net result has been positive as leveraged clients work to capture revenues in up and down markets.
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