Prime brokers cover all the major asset classes including:
- Forex Trading
- Equity Trading
- CFD Trading
- Futures Trading
- Options Trading
- Bond Trading
Forex prime brokers provide access to tier 1 liquidity venues with low latency and execution facilities for institutional forex traders as well as small brokers, funds and banks. Forex prime brokers can also provide pre-trade risk analysis and control for multiple liquidity providers cross margining and collateral reducing the need for additional credit lines.
Equity prime brokers provide their clients with direct market access to global equity markets and stock exchanges. Hedge funds can trade physical equities (shares) or DMA CFDS through an equity prime broker directly or through give-up agreements with executing brokers. Equity prime brokers also prove corporate action services and stock lending services (for short positions) as well as access to IPOs and new issues.
Direct market access
Prime brokers provide direct market to the underlying markets their clients trade derivatives contracts on. DMA (Direct Market Access) is available on equities through stock exchanges, commodities and indices through futures and options exchanges foreign exchange through multiple liquidity providers.
CFD (contracts for difference)
Prime brokers that offer CFDs (contracts for difference) enable their clients to trade directly on a stock exchange’s order book by buying and selling the underlying shares and wrapping the client’s positions in a CFD. This enables hedge funds to build up large equity positions without having to disclose underlying ownership. Prime brokers may also allow clients with large equity CFD positions to vote on corporate actions by taking instructions to vote a specific way on their client’s behalf.
Futures & Options
Futures brokers and options prime brokers provide direct market access to futures exchanges like ICE, CBOE, EUREX and CME. Futures and options prime brokers will either deal direct for customers or act as a middle man for smaller brokerages that use a prime brokers exchange membership to provide access to the exchange for their clients.
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