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This Practice Note considers the role of prime brokers and also sets out a brief overview of some of the services prime brokerage firms typically provide to their clients, (including alternative investment funds (AIF) and their managers). It also sets out an overview of regulatory areas relevant to prime brokers and the Financial Conduct Authority (FCA)’s and the Bank of England (BoE)’s supervisory priorities in relation to prime brokerage. This Practice Note focuses on prime brokers that act in relation to an AIF in the EU or UK.
What is prime brokerage?
Prime brokerage firms (investment banks or other financial institutions) may provide prime brokerage services (both terms are defined in the Glossary of the FCA Handbook, as further detailed below), for instance to an AIF or other large investment client. The services typically include lending cash or securities to an AIF to facilitate the AIF’s long and short strategies. These services may also be offered by the prime brokerage firm acting as a principal.
AIF managers (AIFMs) are regulated under the AIFM Directive (Directive 2011/61/EU) (AIFMD) regime if the
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Jurisdiction(s):
United Kingdom
Related documents:
Practice notes 5
Key definition:
Brexit definition
What does Brexit mean?
means: (a) the United Kingdom (UK) ceasing to be a member state of the European Union (EU) and/or the European Economic Area (EEA) on exit day; and/or (b) the commencement, end of[ or variation in] any transitional, trading or other arrangements from time to time between: (i) the UK and the EU and/or EEA (including during any implementation period and IP Completion Day); and/or (ii) the UK and any other country, group of countries, international organisation, bloc or body (including the World Trade Organization) in contemplation of or (directly or indirectly) in connection with the UK’s said cessation of membership;
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