Prime Brokerage Services
Prime Brokerage Services (PB) have evolved rapidly with the recent growth in global hedge fund activity. PB entails the collection of services that are tailored to support the daily business needs of institutions that do not run such operations themselves. Examples of services include:
- Clearing and settlement of trades (STP)
- Financing of securities/sourcing of short securities
- Education/seminars/research
- Risk management reporting
- Premises management
- Capital introductions
- Corporate action processing
- Access to UBS web technology (Credit Delta, FXAll, Swisskey, TradeWeb, etc)
- Cash management
- Cross product synergies (FI, FX, Equities, Commodities, etc)
The majority of PB services are tailored towards the hedge fund industry focusing in particular on lending money and securities to hedge funds. In this light PB encompasses an embedded repo service for their PB customer financing and short cover requirements.
A successful PB business can give an investment bank advantages in their ability to provide repo services. In particular hedge funds may trade in volatile or illiquid assets that require haircut margins. Under certain circumstances these hair cuts may be reduced when the counterparty holds other assets with their Prime Broker.
