Ways You Can Gain From The Services Of A Prime Broker

By Guillermo K Milam

The word prime broker pertains to an entity, whether an investment bank or securities firm, that provides bundled prime brokerage package to qualified investors and traders, stock professionals, and money and hedge fund managers, among others. These clients require to have access to cash and securities for investment and ultimately achieve absolute return. Prime broker provides hedge fund a centralized clearing platform for securities and nets collateral obligations of the hedge fund across all deals it handles.

Prime broker makes technological tools accessible to their clients, so their clients can monitor their portfolio positions and effectively manage their money. Prime broker are equipped with the technology that can allow clients to gain access to statements on a day to day basis and get precise portfolio reports in real-time.

A prime broker may typically offer a bundled package, which contains services related to securities lending, global custody and financing. There are also brokers that present services associated with operational support and technology tailored to the needs of their clients. Prime broker offers clearing services, custodial services and asset servicing to clients. Clients in exchange for whatever type of collateral they have--securities, cash or Letter of Credit--can borrow stocks and securities from a prime broker.

As part of the prime brokerage services, a prime broker may offer financial and operational support services, such as managing client assets and assuming the responsibility of being the point of contact between a broker dealer and hedge fund. Some prime brokers offer a more specialized set of prime brokerage services. A number of prime brokers own commercial properties, and some of the unique services they offer are subleasing blocks of space to clients, while at the same time offering services on-site. In order to stay competitive in their industry, some prime brokers offer additional prime brokerage services such as capital introduction, a term that refers to a prime broker introducing a hedge fund client and a hedge fund investor to each other. Start-up hedge funds can take advantage of services pertaining to risk analysis and several other consulting services, which particular brokers offer.

Currently, there is a considerable increase in competition between prime brokers, and this can be primarily attributed to the fact that hedge funds became popular. Prime brokerage services ease 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. On a positive note, the risks involved are easy to manage and part of any financial-related business is being prepared for volatile market events.

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You can find other information at prime broker or rediplus.