Arrange large-scale investment deals for clients.
A Prime Broker is a registered Broker who offers a unique set of services to a special set of clients. Prime Brokers generally represent large hedge fund investors or other money managers. Most positions are with large investment banks.
This is a unique position within the securities market in that you wear many hats. In a sense, you are an Accountant, a Broker, a Real Estate Manager, and a Financial Analyst. The services you offer as a Prime Broker provide start-up money, a holding account, a clearing service, and reporting for hedge funds.
To explain what this all means, consider a hedge fund just starting out. The Hedge Fund Manager wants to work with your investment bank. You, as Prime Broker, set up an account for them. This account loans them money so they can get started in their investing. Since you have contacts in the business, you often connect clients with investors as well. Once the fund is up and running, you provide day-to-day support. This includes clearing and settling securities, ensuring that the investments stay within credit limits, and creating daily, weekly, or monthly reports outlining every transaction.
Your services allow the client to do business with several trading houses, with all transactions and paperwork done in your centralized account. You provide risk and portfolio management, as well as send and receive buy-and-sell requests from the Broker making the trades. In addition, you might set up office space for the hedge fund’s operations.