Cash prime brokerage

Hedge Funds & Prime Brokerage Anatomy™ Go Premium 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 Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

Cash prime brokerage describes the traditional margin lending activity of an equity prime broker, where the prime broker lends its clients cash for them to buy shares which the prime broker then holds in custody for the client, or lends its clients shares so they can sell them short and raise cash, which the clients deposit with the prime broker. In both cases the client takes title to actual securities, with all the implications for stamp duty and shareholder reporting that this entails, even though the shares are often sold or rehypothecated away afterwards. Cash prime brokerage is also described as “normal prime brokerage” or “full prime brokerage”, to distinguish it from “synthetic prime brokerage”, which is prime brokerage as described above, only done with derivatives, so the client never gets title to the shares.

So:

• Cash PB: prime brokerage with actual shares;
• Synthetic PB: prime brokerage on equity swaps.

See also

• Margin lending
• Synthetic prime brokerage