Prime Broker Services
A Short List of Prime Broker ServicesQuick Link: Prime Brokers
Many of the emails I get related to choosing service providers, marketing hedge funds or asking for more details on how to network with certain segments of the industry, such as prime brokerage. If you are looking to network or work with a prime broker here are a list of services many prime brokers offer, this may make your process easier:
Capital Introduction: A process whereby the prime broker attempts to introduce its hedge fund clients to qualified hedge fund investors who have an interest in exploring new opportunities to make hedge fund investments.
Securities lending: An important part of the prime brokerage service is the ability of the prime broker to source stock in order to satisfy the short selling requirements of the fund. Many arbitrage strategies are dependent for their success on being able to source stock loan. The quality and depth of the stock lending service is therefore a key differentiating factor between prime brokers. They have access to hard-to-borrow securities.
Risk Management Advisory Services:The provision of risk analytic technology, sometimes supplemented by consulting by senior risk professionals.This includes Portfolio Risk Margining .They offer risk management expertise to tailor various margining methodologies to best suit clients' investment strategies and risk intolerance. As prime brokers, they can view a client's entire prime brokerage portfolio and optimize utilization of margin by recognizing off-setting positions to help manage risk. The capital efficiency gained allows clients to further enhance their investment returns
Financing :-Prime brokers offer an effective framework to facilitate funding needs at highly competitive rates. They work closely with clients to better understand their financing needs and deliver tailored solutions. Financing facilitates leverage of client assets.
Customized Technology and Reporting:-They provide hedge fund managers with portfolio reporting needed to effectively manage money.They provide robust, leading edge technology to meet the ever changing needs of the clients. Through continued investment in technology, they provide clients with customized data delivery and reporting as well as end-to-end workflow solutions to deliver straight-through processing.
Business Consulting Services:- A range of consulting / advisory services, typically provided to "start-up" hedge funds, and focused on issues associated with regulatory establishment requirements in the jurisdiction where the hedge fund manager will be resident, as well as in the jurisdiction(s) where the fund itself will be domiciled.They provide comprehensive business and technology consulting services for hedge funds of varying size and strategy. Recognizing the challenges associated with building an institutional funds management business, they constantly research new technologies and hedge fund services to provide effective solutions for their clients.
Portfolio Analytics:-Prime brokers offer a comprehensive suite of applications to measure risk, performance and P&L.
They provide clients with the flexibility required to manage overall risk exposure. Their system has the capacity to perform multiple customized and ad hoc analyses, including VaR, stress tests, sensitivities to multiple risk factors and “on-the-fly” risk analyses of new portfolios. Data extracts and hardcopy reports, including those that demonstrate transparency to investors, feed directly into client systems.
They provide clients with full portfolio management attribution based on a variety of factors—sector, longs vs. shorts, market cap, product type, country, analyst—as well as inception-to-date analysis at both the fund and individual trade levels.
Through their technology, P&L Link, clients are able to enter trades as they are executed throughout the day as well as view resulting position and profit and loss changes in real-time. The application also pulls analytics from third party systems.
Research Services:-Prime brokers provide clients with timely daily morning research filtered for what they want from over various sources. The clients benefit by receiving access to conferences and research reports from institutions with which the prime brokers have relationships. The clients also benefit from receiving timely information throughout the day on securities and sectors of interest
Global custody:-This service includes clearing, custody, and asset servicing.
Operational support:-Prime brokers act as a hedge fund's primary operations contact with all other broker dealers.
Office Space Leasing and Servicing:- Certain prime brokers lease commercial real estate, and then sublease blocks of space to hedge fund tenants. These prime brokers typically provide a suite of on-site services for clients who utilize their space.
Client Service :- With 24-hour global teams in place, clients benefit from the support and insight of experienced teams who provide innovative solutions based on an in-depth understanding of clients' objectives, operations, technology, data and accounting management. An experienced onboarder leads clients through the integration phase and directs a team of documentation, technology and operational professionals.And with a single point of contact and the full back-up of a dedicated team, they deliver the highest level of service.
Foreign Exchange and Precious Metals Prime Brokerage :-They provide the ability to trade with broad range of executing banks .Their market leading straight-through processing platform enables high-volume execution across spot, forward, swap, option and exotic markets with ease. Their web-based portal provides access to real-time P&L and position management .
Derivatives Prime Brokerage (Credit and Interest Rates) :-Clients benefit from increased capital efficiency through margin netting of entire portfolios. Consolidated collateral payment and one consistent valuation source provide operational efficiencies. Credit derivatives prime brokerage offers the capability to trade directly or on give-up across single name, index and correlation products-in all regions. The interest rate derivatives prime brokerage infrastructure allows clients to trade swap and derivative structures in many currencies.
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