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January 26, 2006
What are Prime Brokerage Units?
If you are interested in the hedge funds industry and have been tracking it at some level, surely you must have come across the term ‘prime brokers’ or ‘prime brokerage units’. However, do you actually understand what these prime brokers are? What they do?
Well to draw out broad definition, we can say that prime brokers are possibly the most important short-term source of transaction flow for investment banks. A Prime Brokerage Unit is pivotal to the investments bank’s access to this transaction flow - A kind of a central node that facilitates hassle free transaction stream.
In their traditional role these Prime Brokerage Units have been known to offer a package of services in the securities transaction services. The bouquet of services offered by these broking units includes research, secured lending, trade execution, risk management, transaction processing, clearing, settlement and custody services to its ‘prime clients’ on structured fee basis. Historically, many of the services offered by the prime brokers were customized to the client and delivered manually by people within the units.
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