Prime brokerage

Prime brokerage is the generic term for a bundled package of services offered by large financial institutions (including investment banks and broker-dealers) to hedge funds, commonly including financing and securities lending to facilitate leveraged trading strategies. Prime brokers also typically provide centralized clearing and settlement and consolidated reporting for client positions.

Prime brokers earn revenue primarily through spreads on financing and securities lending and may also earn fees for clearing and other services. In some jurisdictions and structures, prime brokers may have rights of rehypothecation over client collateral, which can support the economics of financing and securities-lending activities.

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