What is a Prime Broker?
A prime broker executes the trades for the hedge fund. It provides consolidation services including settlements of the trades. In addition it provides services such as; custody of the securities, loaning of the securities for short sale, providing margin financing, and back office technology and reporting. Some Prime Brokers also help fund with asset raising and capital introductions. What is a third party hedge fund marketer? A third party marketer is an independent individual or entity that markets a specific fund or a selected group of funds to investors. Hedge funds usually outsource their marketing efforts as a measure to place more focus and attention on managing the fund rather than on side issues. How can I find a listing of Hedge Funds? A good way to go about finding a lisitng of hedge funds is to use hedge fund databases. Some of them include Altvest, Hedgefund.net, Hedge fund research and TASS. Please also see useful link section of our website for more resources.
A prime broker is a broker or brokerage firm that offers special services to certain clients. These clients often include hedge funds, stock specialists, and other money managers. What these clients have in common is the need to be able to borrow securities or funds in the daily course of business. Most large investment banks offer prime brokerage services to these clients. The services that a prime broker will usually offer, apart from lending money and securities, include operational support, global custody, and technological tools to allow the client to track portfolio positions. Operational support basically means that the prime broker acts as the agent between the client and all other brokers. The prime broker is able to do this because of the principal of global custody. This means that the prime broker holds the clients’ assets on their behalf, as well as providing a centralized means for the closing of transactions and for the servicing of assets. Each client of a prime broker
Prime brokerage is the generic name for a bundled package of services offered by investment banks and securities firms to hedge funds and other professional investors needing the ability to borrow securities and cash to be able to invest on a leveraged basis and achieve an absolute return. The business advantage to a hedge fund of using a Prime Broker is that the Prime Broker provides a centralized securities clearing facility for the hedge fund, and the hedge fund’s collateral requirements are netted across all deals handled by the Prime Broker. The Prime Broker benefits by earning fees (“spreads”) on financing the client’s long and short cash and security positions, and by charging, in some cases, fees for clearing and/or other services. It also earns money by hypothecating the portfolios of the hedge funds it services and charging a fee to those borrowing securities and other investments. The following services are typically bundled into the Prime Brokerage package: * global custody
