Credit Suisse Group will use Paladyne Systems to provide hedge fund front-, middle- and back-office systems to Credit Suisse clients using multiple prime brokers, according to Scott Alderson, president of Paladyne.
"A lot of hedge funds are married to a single prime broker," and adding another requires a hedge fund to spend a significant amount of money and hire additional staff, Mr. Alderson said. "Credit Suisse wanted to find out if there was a way to offer a full front-to-back solution that would support clients that have multiple prime broker relationships." Through this deal, "Credit Suisse can offer our platform to their customers, but the platform doesn't exist within the four walls of Credit Suisse, so privacy is maintained."
Mr. Alderson said Paladyne officials had been talking with three or four other prime brokers, which he declined to name, "but Credit Suisse was the one that reacted the fastest and wanted it most."
Credit Suisse is paying Paladyne a licensing fee. Mr. Alderson said the firm wanted to take an equity stake in Paladyne, "but that was a deal breaker for us."
More hedge funds are beginning to use multiple prime brokers because it gives them greater access to markets, financing, stock lending and other services, he said.
Credit Suisse spokeswoman Mary Claire Delaney said company officials were not available for comment.: