Adding a Second Prime Broker
Adding a Second Prime Broker
While looking for a client document online I found a white paper on prime brokerage which discusses the use of multi prime brokerage firms by a single hedge fund. This white paper claims that the benefits of adding a second prime broker include:
- Mitigation of risk: counterparty, financing, liquidity and operational
- An additional source of alpha-generating trade ideas, capital
introductions, etc. - Ensure optimal financing through competitive pricing of
margin lending and stock loan - Gain access to competitive or innovative cross-margining
policies of the competing prime broker - Leverage across the relative strengths of service providers
in synthetic financing, swap trading or market access - Catalyst for reduced dependency on outside service
providers, giving greater direct operational control
