How To Switch Prime Brokers

The easiest way to switch prime brokers is to use our prime broker finder to be matched with the most relevant prime broker for your fund or family office.

But remember, shopping about for a new prime-broker does not have to end in a move. It can confirm that the existing arrangement remains competitive or provide evidence for renegotiating pricing, financing and service levels.

Nevertheless, the case for regular benchmarking is getting stronger. Hedge funds face rising costs, more demanding investors, rapidly developing technology and an increasingly diverse range of strategies. Almost half of hedge fund investors surveyed by IG Prime were already unhappy with fund fees, while one-third expected to change hedge fund manager during 2026. [1][5]

In that environment, managers cannot afford to overlook avoidable operational costs or outdated infrastructure.

If execution quality is deteriorating, financing is uncompetitive, reporting is too manual or the provider cannot support the fund’s future strategy, it may be time to switch prime broker, or at least find out what the alternatives can offer.

How to compare alternative prime brokers

Before switching, managers should provide shortlisted firms with a representative picture of the fund’s strategy, instruments, trading volumes, position sizes, leverage, short book and collateral.

The comparison should then cover:

1. Total execution and financing costs
2. Liquidity and securities-borrow availability
3. Margin methodology and collateral treatment
4. Market and asset-class coverage
5. Technology and system integrations
6. Risk and regulatory reporting
7. Operational support and account management
8. Counterparty strength and resilience
9. Onboarding and migration requirements
10. Capacity to support the fund’s future growth

Where possible, quoted terms should be tested against historical positions and trading activity. A low headline rate may be less attractive once stock-borrowing costs, margin requirements, data charges and other expenses are included.

View our prime broker comparison tables to see which brokers offer which services.

Is It Time to Switch Your Prime Broker?

If you are thinking of switching prime brokers, we have put together seven questions to ask yourself before you take the next steps.

A hedge fund’s relationship with its prime broker can affect its execution, financing costs, access to liquidity, use of collateral, risk management and ability to report to investors.

Changing prime broker is not a decision to take lightly. Moving positions, renegotiating financing and integrating new systems can be disruptive. However, staying with a provider that no longer meets the fund’s needs can create a larger and more persistent drag on performance.

The hedge fund industry is expanding and becoming more technologically demanding. Global hedge fund assets exceeded $5 trillion for the first time in 2025, reaching a record $5.15 trillion by the end of the year. At the same time, investors are scrutinising fees, performance and operational infrastructure more closely.[1]

Against this background, hedge fund managers should periodically ask whether their prime broker is still providing competitive terms and the infrastructure required to support the fund’s strategy.

1. Are your prime brokers’ execution costs affecting performance?

Execution quality matters because relatively small differences in spreads, slippage, market impact and rejected orders can accumulate across a large number of transactions.

This is particularly important in volatile or less liquid markets. In IG Prime’s 2025 survey, 59% of hedge fund managers identified the market environment as the most influential factor affecting their fund over the previous year, up from 46% in 2024.[2]

A prime broker should be able to demonstrate:

• Access to appropriate liquidity venues
• Competitive and transparent pricing
• Reliable execution during volatile markets
• The capacity to handle the fund’s normal order sizes
• Clear execution and transaction-cost reporting
• Technology suited to the fund’s trading frequency and strategy

IG Prime, for example, says its service gives hedge funds access to multiple deep-liquidity venues and uses execution technology to improve pricing.[3] Other prime brokers will have different liquidity relationships and execution models, so managers should compare actual outcomes rather than relying solely on headline spreads.

If another prime broker can provide consistently better execution after accounting for commissions, financing and market impact, the potential benefit may justify switching or introducing an additional provider.

2. Are your financing terms are no longer competitive?

Financing is one of the most important, and potentially expensive, parts of a prime-broker relationship.

Managers should regularly compare:

• Margin requirements
• Debit and credit interest
• Stock-borrowing costs
• Availability of hard-to-borrow securities
• Haircuts applied to collateral
• Short-sale locate arrangements
• Concentration charges
• Cross-margining opportunities
• The treatment of cash and non-cash collateral

The need to control these costs is becoming more pressing. Some 37% of hedge funds surveyed by IG Prime expected their operating costs to rise by at least 6% during 2026.[4]

Investors are also becoming much less tolerant of high charges. The report found that 47% of hedge fund clients were unhappy with fees and fee structures in December 2025, compared with around one-third a year earlier. Fees had become the second most important reason for investors seeking to change hedge fund manager, only narrowly behind performance.[5]

Prime-broker charges are not the same as hedge fund management fees, but they contribute to the fund’s overall cost base. A manager paying uncompetitive financing, custody or execution charges will either deliver lower net returns or face pressure to absorb more of the expense.

A review should therefore examine the fund’s total economic relationship with its prime broker, not simply its most visible commission rate.

3. Has your strategy has outgrown your prime broker?

A prime broker that was appropriate at launch may not remain suitable as a fund grows or changes strategy.

New hedge fund launches are becoming increasingly diverse. Equity strategies accounted for 35% of new launches covered by the report, while quantitative approaches represented 15%. Global macro, multi-strategy and commodities strategies each accounted for approximately 10%.[6]

A fund expanding beyond its original mandate may require:

• Access to more asset classes and markets
• Physical and synthetic instruments
• Wider international market coverage
• More sophisticated securities financing
• Improved derivatives support
• Larger or more dependable liquidity lines
• Cross-asset margin and collateral management
• Trading outside conventional market hours

IG Prime says it supports multiple asset classes and provides synthetic access to 24/5 pricing on major indices, foreign-exchange pairs and commodities. It also allows clients to hold physical equities and use their value as collateral for synthetic trading.[3]

Those facilities illustrate the types of services managers should compare. The relevant question is whether the prime broker can support the fund’s current and planned strategy efficiently, not how comprehensive its general product list appears.

4. Does reporting no longer satisfy investors?

Institutional investors increasingly expect detailed, timely and customisable information about the funds to which they allocate.

According to the report, emerging managers face growing pressure to provide bespoke investment solutions from inception. This customisation now extends beyond investment terms to sophisticated data and reporting capabilities requiring significant technology investment.[6]

A suitable prime-broker reporting system should provide clear visibility of:

• Positions and cash
• Real-time or near-real-time profit and loss
• Gross and net exposure
• Margin requirements
• Collateral usage
• Financing charges
• Counterparty exposure
• Securities lending
• Corporate actions
• Execution quality
• Historical transactions

IG Prime’s own back-office platform provides real-time account visibility and customisable reporting.[3] Hedge funds should compare this with the data quality, reporting flexibility and integration options available elsewhere.

If the manager must repeatedly manipulate spreadsheets, reconcile inconsistent data or build manual reports to satisfy investors, the apparent convenience of retaining the existing provider may be masking a significant operational cost.

5. Is the technology is holding the fund back?

Technology is becoming integral to hedge fund operations. The report cites estimates that cloud-computing adoption among hedge funds reached approximately 85% in 2025, while around 65% were using big-data analytics to improve investment decisions.[7]

Artificial intelligence is also being adopted across research and operations. In IG Prime’s survey, 51% of hedge fund managers expected AI to have a significant impact on their business during the following three years. Data processing and analysis was the most commonly anticipated application, cited by 55% of respondents, while 42% expected an effect on risk management.[8]

A prime broker does not need to provide a fund’s entire technology stack, but it should not become an obstacle to development. Managers should assess:

• API availability and reliability
• Compatibility with order and portfolio-management systems
• Data quality and delivery speed
• Automated reconciliation
• Real-time risk monitoring
• Custom reporting
• Cybersecurity and resilience
• The ability to integrate new counterparties, administrators and systems

Weak integrations create manual work, operational risk and slower decision-making. These costs become more serious as trading volumes and investor-reporting requirements increase.

6. Does service deteriorates when markets become difficult?

The value of a prime broker is often clearest when markets are volatile, liquidity becomes fragmented or a fund needs an urgent response.

Managers should consider whether they have:

• A dedicated and knowledgeable point of contact
• Reliable support outside standard trading hours
• Prompt responses to margin and collateral questions
• Effective assistance with difficult executions
• Clear escalation procedures
• Consistent service during periods of market stress
• Early communication about changes to margin or financing

A relationship that functions adequately in normal conditions may prove unsuitable when the fund needs it most. Service quality should therefore be assessed through actual experience, including the prime broker’s response during volatile periods.

7. Do your investors expect stronger counterparties or infrastructure?

Fundraising remains particularly difficult for emerging managers. Capital raising is reportedly the main challenge for three-quarters of emerging funds, while allocators have increasingly favoured established brands since the pandemic.[6]

Small hedge funds, those managing less than $250 million, represented an estimated 60% to 65% of funds in 2025 but controlled only around 10% to 12% of industry assets. Funds managing more than $1 billion held over 80% of total industry assets.[6]

The concentration is also visible in new allocations. Of the $115.8 billion of net hedge fund inflows recorded in 2025, large firms received $101.4 billion. Mid-sized firms attracted $7.8 billion and smaller managers received $6.6 billion.[9]

Changing prime broker will not solve a weak fundraising proposition. However, credible counterparties, institutional-quality reporting and dependable operational infrastructure may help a smaller manager demonstrate that the fund is equipped to handle institutional capital.

Managers should ask prospective investors and operational due-diligence consultants whether the existing prime-broker arrangement creates concerns.

Should you switch or appoint a second prime broker?

A complete switch is not always necessary. Depending on the size and complexity of the fund, appointing a second prime broker can provide:

• Additional financing capacity
• Access to different liquidity pools
• Improved stock-borrow availability
• Reduced reliance on one counterparty
• Competitive tension over pricing
• Broader asset-class coverage
• Greater operational resilience

However, a multi-prime model also creates additional reconciliation, collateral-management and operational work. Smaller funds may find that concentrating their business with one provider produces better service or commercial terms.

The decision should be based on the expected net benefit after accounting for migration costs, additional complexity and any changes to margin efficiency.

Sources

[1] IG Prime, The State of the Hedge Fund Industry, May 2026, pp. 2–3 and 22–23.
[2] IG Prime, The State of the Hedge Fund Industry, May 2026, pp. 8–9.
[3] IG Prime, The State of the Hedge Fund Industry, May 2026, pp. 54–55.
[4] IG Prime, The State of the Hedge Fund Industry, May 2026, pp. 22–23.
[5] IG Prime, The State of the Hedge Fund Industry, May 2026, pp. 8–9 and 28–29.
[6] IG Prime, The State of the Hedge Fund Industry, May 2026, pp. 42–43.
[7] IG Prime, The State of the Hedge Fund Industry, May 2026, pp. 38–39.
[8] IG Prime, The State of the Hedge Fund Industry, May 2026, pp. 44–45.
[9] IG Prime, The State of the Hedge Fund Industry, May 2026, pp. 30–31.