Identifying the Right Prime Broker: Basics

Institutions such as hedge funds or mutual funds would obtain trading or investment ideas from many sources, such as banks or brokers/dealers and in return, they would compensate these sources by placing the trades through them. In addition, institutions would employ the services of a custodian bank, where all its securities were held in exchange for a custodial fee. A prime broker is a single entity that provided these services to an institution. We look at how an institution goes about finding the right prime broker.