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Synthetic prime brokerage: Difference between revisions
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{{a|PB| | {{a|PB| | ||
[[File:Synthetic equity swap.jpg|450px|thumb|center|A [[twisty spy technique]], yesterday.]] | |||
}}''Also called a [[synthetic equity swap]], a [[contract for difference]]<ref>This has been apt to confuse people; be warned.</ref> or a [[high-delta equity derivative]].''<br> | |||
You may like our longer-form essay — it’s a contrarian piece, be warned — ''“[[synthetic prime brokerage and the risk of tax recharacterisation]]”''. | You may like our longer-form essay — it’s a contrarian piece, be warned — ''“[[synthetic prime brokerage and the risk of tax recharacterisation]]”''. | ||
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{{LOSD under synthetic pb}} | {{LOSD under synthetic pb}} | ||
{{Difference between SES and MCA}} | {{Difference between SES and MCA}} | ||
{{Synthetic equity swap - FWMD}} | |||
===How [[synthetic equity swaps]] are traded=== | ===How [[synthetic equity swaps]] are traded=== | ||
Unlike other derivatives, synthetic equity trades a lot like a [[cash equity]]: The client goes to a [[equity broker]] to get a [[firm price]] indication, the [[broker]] then “[[gives up]]” this thing that wasn’t actually an order in the first place (it’s complicated: see the box) to the [[prime broker]] who then, at the client's request, writes the swap at the price directed by the [[hedge fund]]. So the swap provider, which lives in the [[prime brokerage]] business, really is a glorified custodian. Cruel people would say that’s not a bad description of a [[prime broker]], come to think of it. | Unlike other derivatives, synthetic equity trades a lot like a [[cash equity]]: The client goes to a [[equity broker]] to get a [[firm price]] indication, the [[broker]] then “[[gives up]]” this thing that wasn’t actually an order in the first place (it’s complicated: see the box) to the [[prime broker]] who then, at the client's request, writes the swap at the price directed by the [[hedge fund]]. So the swap provider, which lives in the [[prime brokerage]] business, really is a glorified custodian. Cruel people would say that’s not a bad description of a [[prime broker]], come to think of it. | ||