INTRODUCTION TO PRIME BROKERAGE
Prime brokerage is the generic name for a bundled package of services offered by investment banks and securities firms to hedge funds which need the ability to borrow securities and cash in order to be able to invest on a netted basis and achieve an absolute return.
The services provided under prime brokering include:
- Securities Lending
- Leveraged Trade Execution
- Cash Management
- Global Custody
- Customized Technology
- Operational Support
- The prime broker primarily benefits by earning fees on financing the client's margined long & short cash and security positions, and sometimes by charging fees for other services they provide.