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    Prime Brokerage 101

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    johnnyboycanada
    Prime Brokerage 101

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    Prime Brokerage 101

    Uploaded by

    johnnyboycanada
    15 views2 pages
    Prime Brokerage 101

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    © © All Rights Reserved

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    PDF, TXT or read online from Scribd

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    Prime Brokerage 101

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    15 views2 pages

    Prime Brokerage 101

    Uploaded by

    johnnyboycanada
    Prime Brokerage 101

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    Prime Brokerage 101 https://www.forbes.com/sites/timothyspangler/2013/04/02/prime-brokera...

    Understanding what hedge funds actually do requires a more-than-casual


    familiarity with the large investment banking teams that are these funds entry
    point into the global markets - that is, prime brokers. Trading securities on the
    scale and with the frequency of the most successful hedge funds takes more than a
    few Bloomberg screens and an online brokerage account. Prime brokers are central
    to the operation and ultimate success of most hedge funds, especially those that
    want to sell short or to magnify their bets with borrowed money.

    In many ways, there would not be hedge funds if it weren’t for the large, bulge-
    bracket investment banks like Goldman Sachs and Morgan Stanley and Bank of
    America Merrill Lynch and Credit Suisse that provide them with these prime
    brokerage services.

    What does a prime broker actually do? In addition to execution and custody
    services, a prime broker provides hedge funds with the ability to borrow stocks and
    bonds (known as “securities lending”) and to borrow money to buy stocks and
    bonds (known as “margin financing capabilities”). The prime broker stands as an
    intermediary between hedge funds and two important sets of counterparties - on
    the one hand, pension funds and other institutional investors with shares to lend
    (for the ultimate purpose of short selling); and on the other, commercial banks with
    money available for margin loans.

    Short selling is so closely associated with hedge funds that perhaps a few words of
    explanation are warranted. When selling a security “short”, the underlying bet
    being made is relatively straight-forward. By engaging in short-selling, an investor

    1 of 2 2018-12-26, 5:18 p.m.


    Prime Brokerage 101 https://www.forbes.com/sites/timothyspangler/2013/04/02/prime-brokera...

    As we transition from fall to winter, celebrating the holidays with family and
    friends and planning winter getaways occupy a lot of our time and attention.
    Equally important, if not more so, you should also prepare your finances to take
    advantage of specific tax-saving opportunities before the end of the year. This is
    especially true for 2018, the first year of the Tax Cuts and Jobs Act. Considering
    changes in income tax rates and traditional deductions, it is critical to invest time in
    year-end planning rather than wait until next year to file your taxes and hope for
    the best. I have outlined six steps that individuals and business owners can
    consider as part of the planning process.

    #1 Review your portfolio.

    2 of 2 2018-12-26, 5:18 p.m.

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