Finding and negotiating with a Prime Broker

C

casablanca

I am currently in the process of establishing a small hedgefund which will start up with AUM of between 2.5m and 5m USD. It will be a multi-strategy fund which will trade both relative value arbitrage (require more leverage) as well as CME futures and currencies. Also, on the equities side, market access to both Europe and USA is needed.

With such a small size I really don't think Goldman will be interested, but I was hoping for a few suggestions on banks that could be interested in assisting such a small start-up. I do have an aquaintance who runs a London-fund, so I have a few other routes to chase down but at the same time I would also like to not draw upon favours.

And hey, since it's ET: I've traded for 15 years, but never dealt with a prime broker before. I do however have a general idea of how their services should be priced, but any input regarding negotiating a prime broker deal would also be highly valued.
 
Quote from casablanca:

I am currently in the process of establishing a small hedgefund which will start up with AUM of between 2.5m and 5m USD. It will be a multi-strategy fund which will trade both relative value arbitrage (require more leverage) as well as CME futures and currencies. Also, on the equities side, market access to both Europe and USA is needed.

With such a small size I really don't think Goldman will be interested, but I was hoping for a few suggestions on banks that could be interested in assisting such a small start-up. I do have an aquaintance who runs a London-fund, so I have a few other routes to chase down but at the same time I would also like to not draw upon favours.

And hey, since it's ET: I've traded for 15 years, but never dealt with a prime broker before. I do however have a general idea of how their services should be priced, but any input regarding negotiating a prime broker deal would also be highly valued.
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you are probably right with GS, although they say that they dont have a minimum, i think $10M is an absolute minimum. you can always sign up with an introducing PB who clears through GSEC.
check your PM i sent u a list with contact #s
 
IB is a good choice. Only need 500k to start, and once you grow and get a little track record, other, better known alternatives will be open to you. With IB, you can do equities, options and futures either in house or give up - cash forex they won't settle from outside vendors but they have their own offering which is pretty good.

Also believe Tradestation has prime for smaller funds as well as Penson.
 
I have two issues with IB which makes them unsuitable, otherwise I think they're great and I've also used them for many years:

- Their overnight leverage is too restrictive with regards to relative value arbitrage
- There's a few European equities markets I need access to which they surprisingly don't have

Copernicus, thank you very much for your PM. I've thanked you in private but why not boost your status in public as well :)
 
NorthPoint Trading Partners http://www.nptradingpartners.com/

They clear through Goldman Sachs, JPM & Jefferies. I listened to a webinar these guys did with Bob Green a while back. They seemed to be worth calling.

Let me know what your experience is with them. I'd be interested in moving some things over there at some point and am curious.

Regards,
Eric
 
beyond some of the obvious names, here a few that cater to the small to intermediate size funds:

RCM Prime
Shoreline Trading Group, LLC
Carlin Financial
Conifer Securities
Cuttone & Company
Davis Securities, LLC
EFX Prime Services
FNYS
 
Someone mentioned Tradestation. I have a friend there if you need a referral.

Otherwise Lime Brokerage has not been mentioned. Cater mostly to black box firms, but they do offer Mini prime and a managed account platform for manual or greybox traders as well. They clear GSEC and Fortis.
 
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