A Guide to Overcoming the Operational Challenge of Multi-Prime by Peter Curley

Introduction

The ongoing market turmoil, the bankruptcy of Lehman Brothers leaving $65 Billion in frozen hedge funds assets, and the doubts surrounding the leading primes have accelerated the demise of the already faltering single prime brokerage model. Single primed funds that had been slow to embrace the new multi-prime world are now highly motivated to reduce counter-party risk by establishing multiple prime relationships. This guide explores the different options available to a single primed fund that is making the leap to multi-prime.

The paper begins by describing the nature of the operational challenge, then weighs the pros and cons of today's multi-prime solutions, and concludes with a recommendation.