Prime Brokerage Services for Automated Trading

T

thomsonfx

Dear all,

Anybody knows what is the min. account requirement to use prime brokerage services in an investment bank being as an institutional investor ? How much does it charge to have a FIX connection enabled ? and how much if we need the ibank developers to implement a given strategy ? What about the operational costs ? Monthly ? Yearly ? I notice that some non-IB also offer institutional service such as Big 4, ECNs or others.. what will be the differences ? Thanks in advance !!

Regards,
Thomson
 
The answers to your questions cannot credibly be answered here.

The costs will vary dramatically depending on who you talk to and the levels of service required by your 'prime broker'

I find it a bit odd that you require 'prime brokerage' for automated trading though! The whole point of prime brokerage is to provide best execution and service levels for large orders as they require more human intervention. Auto trading by its nature requires less intervention, the benefit is that you dont incurr the costs of prime brokerage. I could be wrong!
 
Quote from StreamlineTrade:

The answers to your questions cannot credibly be answered here.

The costs will vary dramatically depending on who you talk to and the levels of service required by your 'prime broker'

I find it a bit odd that you require 'prime brokerage' for automated trading though! The whole point of prime brokerage is to provide best execution and service levels for large orders as they require more human intervention. Auto trading by its nature requires less intervention, the benefit is that you dont incurr the costs of prime brokerage. I could be wrong!
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hi Streamline, thanks for your input

As I know prime brokerage services mainly serve hedge fund clients where they usually posses a mechanical strategy .. but not sure it's common to have purely mechanical or partially mechanical. I think it will be common to have purely mechanical systems in FX context but partially mechancial for equity trading.

Besides, I dont think it concerns with best execution and service levels.. they need to use the services anyway, not only for trading but also on pre-trade/post-trade services.. This is because they basically dont have any backoffice staffs nor platforms.. they only have a team of several to less than twenty people comprising the hedge fund company.

For the purpose of setting up a FIX connection with the execution initiated from the client side, I think it's for hidding the strategy.
However, they will still disclose it as the ibank side can analyse the trade patterns by tracking the trade history for a particular client.. isnt it ? If this is the case, the hedge fund may ask for ibank developers to develop the strategy directly ..
 
no offense intended, but i think your picture on the
hedge fund business is not very accurate. minority
of hfs use mechanical strategies in the first place
and usually they operate a back office on their own.
actually in real quant shops, thus hedge funds that
trade mechanically big time, usually can't afford to
delegate too much to prime brokers.

i think you are actually asking for a broker specialising
on mechanical higher frequency trading and not
for prime brokerage of a hedge fund. seems to me
you are using the term hedge fund in the meaning
of "big, professional institutions".

the FIX protocol as such will not be a real problem
i think for any programmer. a matter of weeks.
 
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