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Prime broker: Difference between revisions
→What prime brokers do
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===What prime brokers do=== | ===What prime brokers do=== | ||
Prime brokers — fondly known in the trade as PBs — usually provide the following services: | Prime brokers — fondly known in the trade as [[PB|PBs]] — usually provide the following services: | ||
*'''[[Custody]]''': looking after the {{tag|hedge fund}}'s “long” investment portfolio - (but this is because they like to [[reuse]] all those lovely assets) | *'''[[Custody]]''': looking after the {{tag|hedge fund}}'s “long” investment portfolio - (but this is because they like to [[reuse]] all those lovely assets) | ||
*'''Bank accounts''': running a multicurrency cash account - from which they can lend money. | *'''Bank accounts''': running a multicurrency cash account - from which they can lend money. | ||
*'''[[Stock lending]]''': lending the {{tag|hedge fund}} the assets it needs to settle [[short sale]]s, and lending it the money it needs to buy assets. | *'''[[Stock lending]]''': lending the {{tag|hedge fund}} the assets it needs to settle [[short sale]]s, and lending it the money it needs to buy assets. | ||
*'''[[Synthetic prime brokerage]]''':providing the {{tag|hedge fund}} with [[derivative]] exposure to assets as an alternative to the [[hedge fund]] buying them outright). Often in the trade called | *'''[[Synthetic prime brokerage]]''':providing the {{tag|hedge fund}} with [[derivative]] exposure to assets as an alternative to the [[hedge fund]] buying them outright). Often in the trade called “[[CFD]]”s. This may involve accepting [[give-up]]s from other [[executing broker]]s. | ||
*'''[[Swap]]s and {{tag|ETD}}'''': Providing general exposure to swaps, futures, options and that sort of thing. | *'''[[Swap]]s and {{tag|ETD}}'''': Providing general exposure to swaps, futures, options and that sort of thing. | ||
Prime | [[Prime broker]]s often also have a consulting arm which helps a nascent {{tag|hedge fund}}s get off the ground: setting it up, finding offices, hiring people, engaging lawyers, recommending (cough) [[prime broker]]s, and [[capital introduction]]. | ||
===Why prime brokers do it=== | ===Why prime brokers do it=== | ||