Pressure on prime broker funding model threatens to drive up financing costs for hedge funds

Big squeeze


The days of hedge funds turbo-charging their returns with vast amounts of cheap leverage provided by prime brokers may be gone forever.

Tougher bank regulations and changing market practices are driving up prime brokers’ operating costs, which will eventually have to be passed on to clients. The scarcity of bank capital also calls into question prime brokers’ capacity to meet the demand for leverage in the long run as hedge fund assets grow and risk appetite returns.

The major prime brokers will

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here:

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: