Making Multi-Prime Work for You
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(4)Overview: Based on conversations with leading hedge funds, prime brokers, and fund administrators, we firmly believe that investor assets and returns can no longer remain vulnerable to the risk of the single-prime model. To effectively manage business and thrive in today�s rapidly evolving market, it is imperative that funds operate within a multiprime model to mitigate potential risk and manage transaction costs effectively. This is the opening installment of a series and shares our findings from discussions with our broadly experienced client base. Historically, most hedge funds with assets greater than U.S. $1 billion operated in a multi-prime environment while smaller funds tended to use a single prime model in order to simplify their operations. Today, however, funds of all sizes are moving to the multi-prime model. Expanding prime brokerage relationships gives funds access to more products and services while reducing risk. Key benefits of the multi-prime model include: ■ Diversification of counterparty risk among multiple brokerage firms and investment banks ■ Increased access to securities lending programs and competitive financing rates ■ Multiple execution platforms and increased opportunities across global markets
