Hedge Funds Impacted By Prime Brokerage Financing

As regulatory measures such as Basel III would impact network of market and counterparty relationship, hedge funds need to consider the critical drivers of change affecting their prime brokers to better adapt to the evolving business environment, notes a JPMorgan paper. JPMorgan in its paper titled “Leveraging the Leverage Ratio” notes a more resilient banking and financial system will ultimately benefit hedge funds as counterparties will be better capitalized, with stronger balance sheets and will operate with more robust financing models than before the financial crisis. Change drivers in prime brokerage funding model According to the JP Morgan paper, the…