Why Use Prime Brokers?

Jerryz,

Never change your style of trading based on the type of money you are trying to attract. If the risk-adjusted returns are there, you will eventually get plenty of money. What's the hurry? :)
There are so many potential distractions in this industry, and it is easy to get sidetracked.
If raising money quickly is an absolute priority, then I would suggest a third party marketer. You have to be careful about what type of deal you are willing to sign, but there are marketers
in this industry with very good connections.
 
Quote from power_uptick:

BlueHorseshoe,

Interesting. I can see that being the case in Asia. But, I would like to draw a distinction between the investment bank acting as a broker and the prime brokerage subsidiary. A hedge fund could always trade through the investment bank without using the prime brokerage services of the investment bank.
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Yes well, I imagine there isn't a big distinction. If one is going to trade through an IB, might as well go through their prime broking arm as costs are probably not that different?

But that is all conversation ... I'll figure it out when I need to figure it out.
 
I was just pointing out that you can always use a broker as a broker whether or not you have a prime brokerage relationship with them or someone else. But in my opinion, the only reason to use someone as a prime broker is because you think they will raise money for you.
 
I have to agree with the others. The only reason to Prime with a big house would be reputation..maybe add slightly more credibility to your fund. Personally I would stay away from any relationship predicated on cap intro...thats just me though. One more thing to think about...even though 1mm is tiny you can still get real good service/prime brokerage at small IB`s to larger houses. You have the stability of GS,BSC or MER. But you get the lower rates the IB`s offer and your statements and reports have the large BD`s name on it. Good luck either way.
 
Thank you indahook, you described almost exactly what I am in the process of doing, I think this route best for where we are at this beginning stage.
 
call me paranoid but i don't like that prime brokers might tell their vip clients or their prop trading groups what my positions are at any given moment.

i have the impression that chicago futures brokers are less dishonest and less likely to sh*t on you for a lousy buck, not that they wouldn't do it but it's less likely
 
Quote from buzzy2:

call me paranoid but i don't like that prime brokers might tell their vip clients what my positions are at any given moment.
i have the impression that chicago futures brokers are less dishonest and less likely to sh*t on you for a lousy buck, not that they wouldn't do it but it's less likely
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Do you know what a world of hurt that BD would be in for if they did that and it leaked? They would lose every customer and end up in court for years. Paranoid does not even begin to describe that statement.
 
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