Hedge Funds And Their Prime Brokers
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Hedge Funds And Their Prime Brokers
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Author : Frank Kenny
language : en
Publisher:
Release Date : 2018
Hedge Funds And Their Prime Brokers written by Frank Kenny and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
Hedge funds are of interest to the Bank because of: their importance for secondary market liquidity and price discovery; the significant use of leverage by some types of hedge funds; and their interconnections with a range of counterparties. Risks from and to hedge funds are therefore relevant to the Bank's Financial Policy Committee, whose primary objective is to identify, assess, monitor and take action in relation to financial stability risks across the UK financial system.The global hedge fund industry has experienced dramatic growth since 2000, with assets under management increasing from US $250 billion to over US $3.5 trillion in 2017. Hedge funds operate a number of different strategies which dictate the markets they invest in and the leverage that they take.Hedge funds are exposed to a number of risks, including risks from using leverage and liquidity risks from investor redemptions. Hedge funds can also transmit risk to the financial system. Since the financial crisis, there have been changes which may serve to mitigate some of the risks. Hedge funds themselves have adjusted their business models, and international regulations, such as the Financial Stability Board's derivative reforms, have limited the risks that hedge funds pose to the financial system.Hedge funds' main source of financing is via banks' prime brokerage services. In the wake of the financial crisis, prime brokers have adjusted their business models, for example there has been growth in the use of synthetic prime brokerage in place of traditional cash prime brokerage.
When Prime Brokers Fail
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Author : J. S. Aikman
language : en
Publisher: John Wiley & Sons
Release Date : 2010-07-13
When Prime Brokers Fail written by J. S. Aikman and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-07-13 with Business & Economics categories.
An informative primer on the new landscape of leading prime brokers Before the recent financial crisis, both regulators and market participants disregarded the complex and dangerous nature of the relationship between prime brokers (the banks) and their clients (the funds). In When Prime Brokers Fail, J. S. Aikman examines the convoluted structure of this relationship, the main participants, and the impact of the near collapse of prime brokerages on the financial world. Filled with in-depth insights and expert advice, When Prime Brokers Fail takes a close look at the unheeded risks of prime finance and lays out the steps required for managers to protect their funds and bankers to protect their brokerages. Examines the challenges, trends, and risks within the prime brokerage space Discusses the structural adjustments firms will need to make to avoid similar disasters Analyzes the complex relationship between hedge funds and their brokerages and the risks that multiply in extraordinary markets Covers new ways to manage an inherently risky business and the regulations that may soon be introduced into this arena Engaging and informative, this timely book details the intricacies and interdependencies of prime brokerages and the role that these operations play in our increasingly dynamic financial system.
Hedge Funds And Prime Brokers
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Author : Mark Berman
language : en
Publisher:
Release Date : 2007
Hedge Funds And Prime Brokers written by Mark Berman and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Business & Economics categories.
Hedge Funds and Prime Brokers explores the ever-changing and dynamic hedge fund-prime broker relationship through the use of a panel comprising of some of the world's experts in investment, law and regulation.
Matching Prime Brokers And Hedge Funds
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Author : Egemen Eren
language : en
Publisher:
Release Date : 2015
Matching Prime Brokers And Hedge Funds written by Egemen Eren and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015 with categories.
Prime brokers and hedge funds form relationships in a matching market. What are the determinants of these matches? How did they change after the financial crisis? I estimate a matching model in which part of the profits of prime brokers and hedge funds depends on variables that are defined at the level of the entire portfolio of clients that a prime broker serves. I show that prime brokers and their client hedge funds choose to have trading relationships with each other in a manner that reflects the benefits of specialization. Moreover, prime brokers preferred risky clients before the crisis, while they were averse to risky clients after the crisis. Identification follows from pairwise matching stability. I analyze the potential underlying economic mechanisms, mainly the cost advantages to a prime broker of collateral re-use between hedge fund clients. This is known as internalization. I estimate that the value of internalization for major prime brokers, such as Goldman Sachs, is around $100-200 million annually.
Business Knowledge For It In Prime Brokerage
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Author : Essvale Corporation Limited
language : en
Publisher: Essvale Corporation Limited
Release Date : 2008
Business Knowledge For It In Prime Brokerage written by Essvale Corporation Limited and has been published by Essvale Corporation Limited this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Business & Economics categories.
Business Knowledge for IT in Prime Brokerage will contain topics such as the description of the prime brokerage function in investment banks; business processes in prime brokerage such as intermediation; the major players in the prime brokerage business; trends in prime brokerage such as territorial trends and the market dynamics; common IT systems used in prime brokerage; and, future of the prime brokerage industry.
Managing Hedge Fund Risk And Financing
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Author : David P. Belmont
language : en
Publisher: John Wiley & Sons
Release Date : 2011-09-13
Managing Hedge Fund Risk And Financing written by David P. Belmont and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-09-13 with Business & Economics categories.
The ultimate guide to dealing with hedge fund risk in a post-Great Recession world Hedge funds have been faced with a variety of new challenges as a result of the ongoing financial crisis. The simultaneous collapse of major financial institutions that were their trading counterparties and service providers, fundamental and systemic increases in market volatility and illiquidity, and unrelenting demands from investors to redeem their hedge fund investments have conspired to make the climate for hedge funds extremely uncomfortable. As a result, many funds have failed or been forced to close due to poor performance. Managing Hedge Fund Risk and Financing: Adapting to a New Era brings together the many lessons learned from the recent crisis. Advising hedge fund managers and CFOs on how to manage the risk of their investment strategies and structure relationships to best insulate their firms and investors from the failures of financial counterparties, the book looks in detail at the various methodologies for managing hedge fund market, credit, and operational risks depending on the hedge fund's investment strategy. Also covering best practice ISDA, Prime Brokerage, Fee and Margin Lock Up, and including tips for Committed Facility lending contracts, the book includes everything you need to know to learn from the events of the past to inform your future hedge fund dealings. Shows how to manage hedge fund risk through the application of financial risk modelling and measurement techniques as well as the structuring of financial relationships with investors, regulators, creditors, and trading counterparties Written by a global finance expert, David Belmont, who worked closely with hedge fund clients during the crisis and experienced first hand what works Explains how to profit from the financial crisis In the wake of the Financial Crisis there have been calls for more stringent management of hedge fund risk, and this timely book offers comprehensive guidelines for CFOs looking to ensure world-class levels of corporate governance.
Do Prime Brokers Induce Similarities In Hedge Funds Performance
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Author : Nataliya Gerasimova
language : en
Publisher:
Release Date : 2018
Do Prime Brokers Induce Similarities In Hedge Funds Performance written by Nataliya Gerasimova and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
Early studies show that hedge fund performance is correlated across funds. I empirically document that similarities in hedge fund returns are associated with the presence of the same prime broker. Using data on prime brokerage relationships from 2000 to 2012, I estimate that dealing with the same broker increases performance correlation across funds of around 53%. My results are robust to controlling for the standard systematic risk factors, to different performance similarity proxies, to different subsamples, and to other possible determinants of performance similarity as the hedge funds' domicile and investment style.
The Guide To Prime Brokerage
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Author :
language : en
Publisher:
Release Date : 2006
The Guide To Prime Brokerage written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Investment banking categories.
Successfully Launching A Hedge Fund In Europe
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Author : Simon Kerr
language : en
Publisher:
Release Date : 2017-03-22
Successfully Launching A Hedge Fund In Europe written by Simon Kerr and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-03-22 with categories.
This book provides a road map to setting up a hedge fund in Europe. The processes that need to take place are described, and the key decisions that have to be made are identified in it. There are a number of important service providers that have to be appointed. This book not only tells you who they are but also gives you the questions to ask the potential providers to differentiate between them. Chapter 1. The Launch Environment (written by Simon Kerr of HFI) 1 Chapter 2. Managing The Launch Project (by Peter Northcott of KB Assoc) 11 Chapter 3. Hedge Funds And Public Relations (Henrietta Hirst of City Savvy) 43 Chapter 4. Regulatory Incubation With The Pioneer - Sturgeon Ventures (Seonaid Mackenzie) 57 Chapter 5. Setting Up A Hedge Fund In Europe - The Auditor and Accountant's Perspective (Bernadette King & Melanie Pittas of haysmacintyre) 71 Chapter 6. Fund Administration For European Hedge Funds (Peter Jakubicka of Circle Partners) 105 Chapter 7. Prime Brokerage For European Hedge Funds (James Skeggs of SocGen Prime Services) 127 Chapter 8. Legal Services For European Hedge Funds (Gus Black and Craig Borthwick of Dechert LLP) 153 Chapter 9. IT Services & Consultancy For Hedge Funds (Tom Woollard of Edge Technology) 197 Chapter 10. Perspective Of An Experienced Hedge Fund COO (Pseudonymous) 215 Chapter 11. New Managers From An Investor's Perspective (Anthony Lawler of GAM) 225 Chapter 12. Backers Of Early-Stage Hedge Funds (Hedge Fund Insight) 239 The book contains guidance on the project management of getting a hedge fund to market from a European base. Often a new hedge fund manage may have had limited exposure to services that are available to small hedge fund fund management companies. Should you engage a PR company, are you allowed to talk to the media, if you can how do you do it to your advantage? Is it worthwhile setting up your own regulated vehicle, or should you start out under a regulatory umbrella company? These are the kind of questions answered directly in the book. Fund Administrators differ in what they can do for a hedge fund managers beyond calculating a NAV. Do you need risk measurement capability from a third party or not? What middle office services would complement your Portfolio Management System? Getting these high level questions right sets a new hedge fund firm off in the right way for the medium-to-long term. The key service providers covered include lawyers and prime brokers who share their experience on the structural issues that have to be settled. There is a significant technological infrastructure required to set up a hedge fund in Europe - and the considerations behind the choices to be made are fully reflected. This book takes you through the start up process from all sides, including the insights from a hedge fund staffer that has been through the process several times over. You can learn from his mistakes without having to make them yourself. Funds cannot launch and prosper without investors. The last two chapters give the perspective of a seasoned investor in hedge funds and a list of investors that are prepared to commit to a hedge fund in it's early stages of development. The list has full contact details for the key decision makers.
Three Essays On Hedge Fund Investments And Investment Banks
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Author : Xiaohui Yang
language : en
Publisher:
Release Date : 2016
Three Essays On Hedge Fund Investments And Investment Banks written by Xiaohui Yang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
This dissertation focuses on studying how investment banks affect hedge fund equity investments through acting as prime brokers for hedge funds. The first chapter studies how the relationships between hedge funds and investment banks are maintained through equity issuance and prime brokerage business. Using a comprehensive dataset of hedge funds and IPO allocations, I examine IPO allocation decisions by investment banks to hedge funds. I find that investment banks whose prime brokers have strong relationships with hedge funds and are lead underwriters of IPOs tend to allocate more IPOs to these hedge funds. Moreover, the allocation to hedge funds is larger when IPOs are underpriced, and the allocations are larger during bearish periods compared to bullish periods. I further document that hedge fund investments in IPOs are determined by the strength of hedge fund-prime broker relationships, rather than by hedge fund manager skills. I also find that hedge funds which have multiple prime brokers tend to invest in more IPOs. As a result, prime brokers implicitly support hedge funds through favorable IPO allocations. The second chapter finds that hedge funds can profit from anticipating upcoming changes in analysts' recommendations before they become public. I provide evidence supporting the hypothesis that hedge funds that have prime brokerage affiliations with analysts' investment banks have access to information on upcoming analysts' recommendations. Focusing on recommendations issued up to two days following stock holding report date, I find that large hedge funds that are clients of the investment bank (affiliated hedge funds) tend to buy upgrades and sell downgrades in a larger magnitude compared to other hedge funds before the public release of recommendations. Moreover, relative to non-affiliated hedge funds, affiliated hedge funds have a higher probability to trade in a way that is consistent with upcoming recommendation changes and earn higher (or avoid lower) short-term abnormal returns by buying (or selling) before upgrades (or downgrades). The results indicate that prime brokerage affiliation is an important source of private information on analysts' reports for hedge funds. The third chapter studies hedge funds' equity investment strategies by examining the investment value and risk consequence of their holdings concentration in large-cap and small-cap stocks. We find that stocks, especially small-cap ones, with concentrated hedge fund holdings earn higher future returns than those with less concentrated holdings. We also find that stocks with concentrated hedge fund holdings have higher downside risks, and the holdings concentration expedites the drop of stock performance, especially during financial crisis. In addition, small-cap stocks with higher holdings concentration are associated with hedge funds using higher leverage, consistent with Stein (2009) that deleverage leads to the negative return shock and downside risks in stocks. Our findings suggest that hedge fund managers are skilled in making equity investment under different market efficiency.