Information You Should Know About A Prime Broker And The Prime Brokerage Services They Provide

Prime broker is a firm, such as securities firm and investment bank, which offers bundled package to clienteles such as stock specialists, expert traders, hedge fund managers, money managers and other professional investors. These clients make use of the services offered by a prime broker because they have a common need, which is to have a way to borrow money and securities so they can use it for investment. Prime broker functions as a provider of consolidated clearing facility for notes, bonds, stocks and other securities to a hedge fund and netter of hedge funds' collateral needs.

Prime broker provides many other services and one of which is providing technological tools to equip their clients the capability to keep track of portfolio positions and other aspects of portfolio reporting for effective money management. A few of the technological solutions that a prime broker may provide to clients are real-time portfolio reporting and daily statements.

Prime broker differs in the kind of bundle services package that they offer, and while a few prime brokers may have services related to finance, global custody and securities lending, others may offer other types. There are also brokers that offer services related to operational support and technology tailored to the needs of their clients. Prime broker provides clearing services, custodial services and asset servicing to stock experts, money managers and other clients. Prime brokers also have stocks and other securities that clients can borrow from, and all the client needs to do is have securities, money or Letter of Credit handy and make sure that the value is the same or greater than the loan.

As part of the prime brokerage services, a prime broker may provide financial and operational support services, such as administering client assets and taking in the responsibility of being the point of contact between a broker dealer and hedge fund. In addition to the common prime brokerage services that prime brokers may offer, they can also make some special services available. Perfect examples of this kind of services are providing hedge fund with office space by leasing it to them and offering on-site services. To maintain competitive edge, some prime brokers offer "value-added" prime brokerage services through capital introduction, a service in which the prime broker introduces a hedge fund client to a hedge fund investor. Prime brokers also offer prime brokerage services in the form of consulting services and risk management advisory services particularly to newly established hedge funds.

Due to the increase in the popularity of hedge funds, competition amongst prime brokers have increased in the recent years and they have established themselves as vital movers in the financing world. Prime brokerage services relieve some of the burdens associated with asset management off clients and assist in hedge fund growth and profit realization. Similar to other financial services, prime brokerage services may have various benefits, but they also have risks involved. However, these risks can be managed easily, and preparing for unfavorable market events is part of the business.

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