The success of any hedge fund largely depends on the quality of its prime brokerage services. Prime brokers provide a gateway to global markets, allowing hedge fund managers to trade securities on a large scale, sell short when prices are expected to fall, and borrow money to increase their bets when those prices are expected to fall. increase. A prime broker is not a solo broker per se. Rather, the term “prime brokerage” refers to a range of services offered by large investment banks and private financial advisory firms to hedge fund managers. So, what exactly does a prime broker do? Below is some useful information to help you answer this question. What services do prime brokers provide? To understand what prime brokers do, it is first necessary to have a basic understanding of the services that they they provide. The most basic services offered by prime brokerage teams include: Custody services: Prime brokers provide custody of the hedge fund's securities and cash, providing fund managers with the ability to trade securities with multiple brokerage firms while keeping the fund's assets in a centralized account. Margin financing and securities lending: Perhaps the most important role of prime brokers is to act as an intermediary between hedge funds and counterparties, such as investment banks and institutional investors, who are available to provide margin financing and securities lending. With the help of prime brokerage teams at banks and major securities firms, hedge fund managers are able to obtain margin loans from commercial banks to provide the fund with the liquidity needed to purchase securities. stocks and bonds. Prime brokers also identify pension funds and other institutional investors owning stocks and...... middle of paper ......al is struck. Term Lender Relationships: Term loans are necessary to the success of a hedge fund, so it is essential for fund managers to ensure that the prime brokers they hire have strong relationships with a wide variety of term lenders. Before signing a contract, hedge fund managers should meet with potential prime brokerage service providers to find out whether or not each potential broker is capable of meeting the needs of its fund. At this meeting, the prime broker will also ask for information about the hedge fund itself, such as the fund's management structure, investment instructions and other details that will help the broker assess whether the hedge fund is suitable. or not as a customer. . For more details on mshPrime, the suite of premier brokerage professional services offered by MS Howells & Co., visit http://mshwells.com/.