Singapore's DBS Group is considering entering the hedge fund prime brokerage market as it seeks to expand its institutional trading services following a 65% decline in third-quarter markets trading income, according to a report by Finance Magnates.

Chief executive Tan Su Shan said the bank is evaluating opportunities to combine its existing custody, market access and execution capabilities into a prime brokerage offering, potentially providing financing, securities lending and clearing services to hedge funds and other institutional investors. No final decision has been made on the structure of the business.

The proposed expansion would place DBS in competition with established prime brokerage providers including Goldman Sachs, JPMorgan and Morgan Stanley. Goldman Sachs reported a 72% year-on-year increase in third-quarter equities revenue to $6.44bn, including $3.37bn generated from equities financing, highlighting the growing importance of hedge fund financing to major investment banks.

DBS's consideration of the market comes as Singapore continues to attract hedge fund managers seeking access to Asian investment opportunities. Tan highlighted the bank's established financial institutions franchise and growing institutional equities business as potential foundations for a broader prime services offering.

The plans emerged alongside weaker quarterly results, with DBS reporting a 5% decline in net profit to S$2.81bn, below analyst expectations of S$2.95bn. Markets trading income fell from S$439m to S$152m amid challenging equity market conditions and higher interest rates, although treasury customer income increased 21% to a record S$2.62bn over the first nine months of 2026.

A move into prime brokerage would allow DBS to deepen relationships with hedge fund clients while diversifying its institutional revenue streams, as demand for financing, custody and execution services continues to grow across Asia's alternative investment industry.