The basic services offered by a prime broker give a money manager the ability to trade with multiple brokerage houses while maintaining, in a centralized master account at their prime broker, all of the hedge fund’s cash and securities. Additionally, the prime broker offers stock loan services, portfolio reporting, consolidated cash management and other services. Fundamentally, the advent of the prime broker freed the money manager from the more time consuming and expensive aspects of running a fund. These services worked because they also allowed the money manager to maintain relationships with multiple brokerage houses for IPO allocations, research, best execution, conference access and other products.
The concept and term "prime brokerage" is generally attributed to the U.S. broker-dealer Furman Selz in the late 1970s. However, the first hedge fund operation is attributed to Alfred Winslow Jones in 1949. In the pre-prime brokerage marketplace, portfolio management was a significant challenge; money managers had to keep track of all of their own trades, consolidate their positions and calculate their performance regardless of which brokerage firms executed those trades or maintained those positions. The concept was immediately seen to be successful, and was quickly copied by the dominant bulge bracket brokerage firms such as Morgan Stanley, Bear Stearns, Merrill Lynch, Credit Suisse, Citigroup, and Goldman Sachs. At this nascent stage, hedge funds were much smaller than they are today and were mostly U.S. domestic long-short equities funds. The first non-U.S. prime brokerage business was created by Merrill Lynch's London office in the late 1980s. Post the 2007 - 09 financial crisis new entrants came to the market, such as HSBC with a custody-based prime brokerage offering.
Read more about this topic: Prime Brokerage
Other articles related to "history":
... History of Charles XII, King of Sweden (1731) The Age of Louis XIV (1751) The Age of Louis XV (1746–1752) Annals of the Empire – Charlemagne, A.D ... II (1754) Essay on the Manners of Nations (or 'Universal History') (1756) History of the Russian Empire Under Peter the Great (Vol ... II 1763) History of the Parliament of Paris (1769) ...
... The breakup of Al-Andalus into the competing taifa kingdoms helped the long embattled Iberian Christian kingdoms gain the initiative ... The capture of the strategically central city of Toledo in 1085 marked a significant shift in the balance of power in favour of the Christian kingdoms ...
... The Skeptical School of early Chinese history, started by Gu Jiegang in the 1920s, was the first group of scholars within China to seriously question the ... early Chinese history is a tale told and retold for generations, during which new elements were added to the front end" ...
... The history of computing is longer than the history of computing hardware and modern computing technology and includes the history of methods intended for pen and paper or for chalk and slate, with or without the ...
... gambling in some form or another has been seen in almost every society in history ... the Ancient Greeks and Romans to Napoleon's France and Elizabethan England, much of history is filled with stories of entertainment based on games of chance ... In American history, early gambling establishments were known as saloons ...
Famous quotes containing the word history:
“It gives me the greatest pleasure to say, as I do from the bottom of my heart, that never in the history of the country, in any crisis and under any conditions, have our Jewish fellow citizens failed to live up to the highest standards of citizenship and patriotism.”
—William Howard Taft (18571930)
“History is the present. Thats why every generation writes it anew. But what most people think of as history is its end product, myth.”
—E.L. (Edgar Lawrence)
“I believe that history might be, and ought to be, taught in a new fashion so as to make the meaning of it as a process of evolution intelligible to the young.”
—Thomas Henry Huxley (182595)