Volatility drives institutional investor shift to boutique brokers
This shift has left many clients under serviced. Independent brokers are stepping into the space once occupied by these global players, differentiating themselves through personalisation and speed.
'Unlike at some of the larger institutions, independent prime brokerage offerings focus on providing a seamless and tailored client experience, irrespective of whether they have $1 million or $100 million,' says Klynhout. 'Personalised service ensures asset managers can remain agile and responsive to market conditions whilst knowing they're going to be supported through the decisions they make.'
The evolving role of boutique firms is not just a matter of scale, but of scope. Lazarus reports a growing range of use cases: family offices hedging structured investments, corporates managing treasury exposures, and broker-dealers running internal portfolios. Niche strategies are gaining traction across Asia, the Middle East and Europe.
Tailored model
Rather than offering a one-size-fits-all service, boutique brokers are tailoring models to client strategy. 'The nature and importance of a prime brokerage relationship can have significant ramifications on the success of a portfolio,' Klynhout says. 'A bespoke model does not take this for granted and instead prioritises client success.'
Australia is becoming a strategic base for this kind of model. Lazarus' Sydney headquarters puts it in a strong position to service emerging financial centres in Asia and the Middle East during local hours. Unlike larger institutions that focus on balance sheet returns, firms like Lazarus position their value around global access and consistent service for institutional portfolios of $1 million to $500 million.
The client base itself is also broadening. 'The prime brokerage client base has grown beyond traditional hedge funds,' Klynhout says. 'Lazarus is working with family offices, broker-dealers and emerging managers looking for cost-efficient, high-quality, and swift support.'
What began as a response to disruption is now evolving into a broader realignment. For many institutional investors, the old default is no longer the default. The future of prime brokerage may not belong to the biggest – but to the most adaptable.
Global casualties
That shift is also playing out globally. Japanese investment bank Nomura, one of the biggest casualties of the Archegos collapse, is now tentatively re-entering parts of the prime brokerage space it abandoned in 2021.
The bank lost $2.9 billion when Archegos imploded and is only now rebuilding its prime business in the US and Europe under new leadership. Executives hope to triple revenues from the division, but insiders say the renewed push is cautious and tightly risk-controlled.
Industry-wide revenues from prime brokerage hit a record $27 billion in 2024, driven by multi-strategy hedge funds and high equities prices. But that growth has brought heightened scrutiny. Regulators in the UK and US are reviewing how banks manage risk across their prime units, citing concerns over market concentration and oversight—risks that many independent providers are structured to mitigate.
Nomura, for its part, says it has 'put Archegos behind us', but its gradual re-entry underscores how far the bulge brackets have pulled back. With banks now more selective, institutional investors are increasingly turning to agile, independent brokers who can move faster and serve them better.
Stepping into the gap
Market observers note that nonbank providers, like the boutique prime brokers gaining ground in Australia, are stepping into roles once dominated by global banks. McKinsey's Global Private Markets Report 2025 highlights how institutional investors are drawn to flexible, specialised strategies amid volatility, particularly in private debt.
'In uncertain market conditions, the security derived from debt's privileged position in the capital structure has appealed to institutional investors,' the report says.
These nonbank entities offer integrated services such as prime brokerage and custody, aligning with investors' need for agility and personalised risk management.
'The rapid run-up in global interest rates from 2022 to 2023 (an increase of more than 500 basis points in the United States) shook private equity to the core,' McKinsey says, citing inflation and geopolitical risk as ongoing pressures.
Boutique prime brokers are capitalising on that turbulence, helping institutional clients execute niche strategies with precision and speed.
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