Prime brokerage transactions: Difference between revisions

Revision as of 17:51, 6 January 2021

Prime Brokerage Anatomy™

There is no industry standard prime brokerage agreement, so this is not so much an anatomy as a collection of resources about an amorphous subject. Hedge fund \| AIFMD \| Depositary \| Prime broker \| prime brokerage agreement \| synthetic prime brokerage \| margin lending \| custody asset \| CASS Anatomy \| reuse & rehypothecation \| hedge fund \| leveraged alpha \| greeks \| short selling Index: Click ᐅ to expand: Prime Brokerage Securities Financing Investment Strategies

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The classic prime brokerage transactions, illustrated in the panel:

Physical long: A physical long position financed with a margin loan.
Physical short: A physical short position created by selling a stock borrowed under a stock loan.
Synthetic long: A “synthetic” economic equivalent of a physical long position created by entering an equity derivative as a Floating Amount Payer.
Synthetic short: A “synthetic” economic equivalent of a physical short position created by entering an equity derivative as a Equity Amount Payer.

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-{{a|PB|[[File:PB margin loans.png|450px|thumb|center|The classic margin loan, yesterday]]}}
+{{a|PB|[[File:PB margin loans.png|450px|thumb|center|The classic margin loan, yesterday]]
-The classic prime brokerage transaction: a long position financed with a [[margin loan]].
+[[File:PB stock loans.png|450px|thumb|center|The classic [[stock loan]], yesterday]]
+[[File:PB long swap.png|450px|thumb|center|The classic long swap, yesterday]]
+[[File:PB short swap.png|450px|thumb|center|The classic short swap, yesterday]]
+}}The classic prime brokerage transactions, illustrated in the panel:
+*'''Physical long''': A physical long position financed with a [[margin loan]].
+*'''Physical short''': A physical short position created by selling a stock borrowed under a [[stock loan]].
+*'''Synthetic long''': A “[[synthetic]]” economic equivalent of a physical long position created by entering an equity derivative as a {{eqderivprov|Floating Amount Payer}}.
+*'''Synthetic short''': A “[[synthetic]]” economic equivalent of a physical short position created by entering an equity derivative as a {{eqderivprov|Equity Amount Payer}}.
 {{sa}}
 *[[Prime brokerage]]