Does the prime brokerage sec lending model need resuscitation?
Dec 7th, 2009 | Filed under: Hedge Fund Industry Trends, Hedge Fund Regulation, Today's Post
The world is full of middle-men: Walk into a car dealership to purchase a car and you go through a salesperson, who takes a cut for showing you the car; walk through a house or apartment and the real estate broker takes a cut for opening the doors and closets.
Like it or not, and as counter-intuitive as it sometimes may be, it is the way transactions work.
So it’s been with the securities, or “sec” lenders: institutions that have access to “lendable” securities. Asset managers who have securities under management, custodian banks holding securities for third parties or third party lenders who access securities automatically via the asset holder’s custodian have for years taken a nice slice of the pie to lend back out stocks to others who need them. More…
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