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Home > QFINANCE Dictionary > Definition of prime broker

Definition of

prime broker

Stockholding & Investments

investment bank servicing hedge fund an investment bank that provides borrowing, lending, and settlement services to a hedge fund. Such financial services are often considered the most profitable activity for a major bank but great losses can be incurred if the hedge fund fails.

Recommended Further Reading (Term count)
  • Savings is a Growth Industry
    by Anthony Bolton
    Anthony Bolton managed one of the UK’s most successful and largest mutual funds, Fidelity Special Situations, from 1979 to 2007. Over that period the fund generated an annualized return of 20% (against some 8% for the FTSE All-Share Index). He graduated from Cambridge University with a degree in engineering and entered the City as an investment analyst at investment bank Keyser Ullman. In 1979, Bolton was hired by Fidelity, the Boston-based...
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    It has become crystal clear that cash must be treated as a separate asset class. This means taking care when considering how, and with whom, cash should be held and invested.It is equally clear that risk is a very relevant factor for cash. Institutional investors have discovered in the past year that so-called safe cash investments have not been as secure as they thought. For many years, investors have ignored the fundamental principle that...
prime broker - Related Articles
  • Investing Cash: Back to Basics

    Best Practice

    is a hedge fund with a single prime broker. Not only does the fund have a serious risk with the prime broker as the derivative counterparty, but the cash margin/collateral would typically be held with the same party, doubling the counterparty risk. Before the Bear Stearns and Lehman Brothers troubles
    By Mark Camp, Emma Du Haney

  • The Role of Short Sellers in the Marketplace

    Best Practice

    We will discuss the academic literature on short sales, illustrate the short-sale process, examine the role of various participants in the process including lenders such as mutual funds and pension funds, agent intermediaries such as prime brokers, and borrowers such as hedge funds, mutual funds, and options market-makers, and we will present statistics on the universe of lendable and loaned securities
    By Raj Gupta


Definitions of ’prime broker’ and meaning of ’prime broker’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’prime broker’ and other financial terms with our online QFINANCE Financial Dictionary.

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