Merlin Securities and Northern Trust in global custody and administration deal

Merlin Securities has struck a deal with Northern Trust to provide its prime brokerage clients with access to Northern Trust's global custody and fund administration services.

The arrangement seeks to address concerns hedge funds and investors have about counterparty risk and the security of assets held in prime brokerage accounts.

Merlin provides prime brokerage services through its broker-dealer custody relationships with Goldman Sachs Execution and Clearing and JP Morgan Clearing Corp.

By offering its hedge fund clients access to custody services, Merlin is following in the footsteps of some of the largest prime brokers in the business.

In September, JPMorgan announced it had created a dedicated group to provide an integrated prime brokerage and custody service to hedge funds and traditional asset managers.

Morgan Stanley has also launched a custody service for its hedge fund clients. In June the bank said its prime brokerage clients will have the option of placing their long securities in a custody account provided by the bank's chartered trust company, Morgan Stanley Trust National Association.

"In today's market, managers and investors are seeking custodial solutions that reduce their counterparty risk and provide fully integrated, multi-custodian reporting analytics and risk data," said Stephan Vermut, founder and managing partner of Merlin.

Northern Trust has total assets under custody of $3.2 trillion. Peter Cherecwich, chief operating officer of Northern Trust, said the bank currently provides custody and fund administration services for $90 billion in assets managed by hedge funds.