BNY Mellon's Pershing Unit Releases New Study Focusing on the Multi-Prime Approach for Hedge Fund Managers

JERSEY CITY, N.J., March 17 /PRNewswire/ -- Pershing LLC, a BNY Mellon company, and the Aite Group, LLC have published a new independent study, Expansion and Diversification: The Multi-Prime Model for Hedge Funds, that examines the key role of prime brokers and the market trend of hedge fund managers implementing the multi-prime business model. This study also identifies the benefits and challenges of the multi-prime approach, outlining the steps that may help ensure a successful transition for hedge funds.

Available through Pershing Prime Services and BNY Mellon Alternative Investment Services, the study indicates that, as a result of major prime brokerage failures, counterparty risk has emerged as one of the major driving factors behind the growing trend among hedge funds towards the multi-prime model. The report suggests that hedge funds that adopt the multi-prime relationship model can mitigate counterparty risk and enhance opportunities for sustained growth. Key findings from the study include:

• Multi-Prime Model Transcends Hedge Fund Size--Driven by the need to diversify in order to mitigate their counterparty risk and increase transparency, an ever-growing number of hedge funds of all sizes are leveraging multi-prime relationships to adapt and seek new ways to grow their businesses.
• Multi-Prime Model Drives Growth and Profitability--Among other benefits, multi-prime relationships can help ensure the safety and soundness of a firm's assets, while widening its market reach and providing access to new asset classes and a broader array of sophisticated trading tools.
• Hedge Funds Must Overcome Key Data Management and Technology Challenges--To effectively operate within a multi-prime environment--which adds such technology stressors as potential data loss, reconciliation failures and inaccurate reporting--hedge funds must develop an internal platform or use a service provider to streamline technology communications.

 

Craig Messinger, Managing Director of Pershing Prime Services, said, "Migration to a multi-prime model involves coordinating across multiple service providers, including prime brokers, hedge fund administrators, consulting firms and IT providers. However, once a stable multi-prime relationship model has been implemented, hedge funds can reap enormous benefits, such as diversification to mitigate their counterparty risk, increased operational efficiencies and access to competitive financing, stock loans, business consulting and OTC support."

Sang Lee, Managing Director of Aite Group, said, "Hedge funds should take a long-term approach, relying on their initial prime broker partner to start the process of interacting with other prime brokers, while looking for ways to create a more sustainable multi-prime management framework. With the right multi-prime structure in place, hedge funds can better manage counterparty risk and focus on generating higher investment returns."

Pershing Prime Services delivers an unconflicted, comprehensive suite of global prime brokerage solutions, including extensive access to securities lending, dedicated client service, robust technology and reporting tools, worldwide execution and order management capabilities, a broad array of cash management products and the integrated platform of BNY Mellon. Pershing Prime Services is a service of Pershing LLC. A copy of Pershing's new independent study and additional information about Pershing Prime Services' capabilities and solutions can be found by visiting www.pershingprimeservices.com.

Pershing's parent company, BNY Mellon, also provides a wide range of administration services to hedge funds, funds of hedge funds and private equity assets through BNY Mellon Alternative Investment Services, one of the world's leading providers in this market segment with more than $200 billion in hedge fund assets under administration. In addition to hedge fund administration, BNY Mellon offers a wide range of accounting, cash management, collateral management, custody, asset management and wealth management services to the hedge fund industry.

Pershing LLC (member FINRA/NYSE/SIPC) is a leading global provider of financial business solutions to more than 1,150 institutional and retail financial organizations and independent registered investment advisors who collectively represent approximately five million active investors. Located in 20 offices worldwide, Pershing and its affiliates are committed to delivering dependable operational support, robust trading services, flexible technology, an expansive array of investment solutions, practice management support and service excellence. Pershing is a member of every major U.S. securities exchange and its international affiliates are members of the Deutsche Borse, the Irish Stock Exchange and the London Stock Exchange. Pershing LLC is BNY Mellon company. Additional information is available at www.pershing.com.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 34 countries and serving more than 100 markets.  BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team.  It has $22.3 trillion in assets under custody and administration, $1.1 trillion in assets under management, services $12.0 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day.  Additional information is available at www.bnymellon.com.

SOURCE Pershing LLC