Foreword
The prime brokerage landscape has experienced significant change over the past decade. Consolidation among major players, a changing regulatory landscape, evolving client needs and shifting allocator expectations have all contributed to a more complex environment for fund managers. The challenge for many lies in navigating these changes while ensuring their prime brokerage relationships remain aligned with their operational priorities, investment strategies and growth ambitions.
This Guide to Sound Practices for Selecting and Periodically Assessing Prime Brokers arrives at a pivotal moment. Whether exploring new prime brokerage arrangements, reassessing existing relationships or diversifying counterparties, it provides a thoughtful and practical framework to make informed decisions at every stage.
As fund managers contend with increasing barriers to entry, greater scrutiny on balance sheet efficiency and heightened competition in capital raising, the actionable tools and insights within the guide provide clarity on available options, uncover opportunities and support the development of resilient partnerships. It also addresses key considerations in due diligence, operational efficiency and the dynamics of multi-prime relationships; helping managers to align prime brokerage services with their strategies, growth ambitions and investor responsibilities.
We are proud to have been part of the team that produced this latest edition - which reflects the collective expertise of AIMA and its members - and support the ongoing effort to elevate standards and practices across the industry. It is our hope that this guide serves as an essential resource for fund managers, fostering stronger partnerships and enhancing the resilience and performance of investment management operations.
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Lawrence Obertelli
Head of European Prime Service Sales, Marex Prime Services
Download the guide
The Guide to Sound Practices for Selecting and Periodically Assessing Prime Brokers (the “Guide”) is the initiative of AIMA’s Sound Practices Committee. AIMA first published the Guide in December 2014. This edition of the guide revisits the world of prime brokerage 10 years on, focussing more on the due diligence and review aspects of the process, while generally updating the rest of the guide.
The guide is aimed at managers who wish to select a prime broker, whether establishing an initial relationship, choosing an additional prime broker for their business or appointing a prime broker to perform safekeeping services. The guide should also be useful to managers who periodically review existing prime brokerage relationships from a service, risk, diversification, value or cost perspective. In addition, this guide also serves as a complement to the AIMA illustrative questionnaire for due diligence of prime brokers, and as such could be used as part of any due diligence process that a manager may undertake when selecting a prime broker for its business. That DDQ is available here for members to download.
We would like to thank the members of the working group (who are listed in Appendix B of the guide), all of whom have volunteered their time and worked hard to produce this revision of a valuable guide to sound practices.
Members with a log-in should log-in here to be provided with a download link to the Guide to Sound Practices.
View the Webinar
You will also be able to access below the replay of the webinar session held to mark the launch of this version of the guide.
Table of Contents
- Introduction
- What is a "prime broker"?
- Why engage a prime broker?
- Multi-prime relationships and alternatives
- Economics of prime brokerage
- Entity-level due diligence
- Service offering
- Technology considerations
- Organisation and governance
- Compliance and controls
- Recordkeeping
- Service-level due diligence
- Execution
- Financing
- Securities lending
- Margin
- Settlement and custody
- Asset servicing
- Asset protection
- Synthetic products
- Exchange-traded derivatives
- FX prime brokerage
- Consulting
- Capital introduction
- Regulatory reporting
- Other services
- Onboarding
- Relationship documentation
- Service standards and performance measures
- Key commercial terms
- Key legal considerations
- Periodic reassessment
- Relationship management and oversight
- Monitoring of financial standing, incidents, reputation, regulatory sanctions
- Due diligence refresh
- Offboarding/transitioning
Appendix A: Essential due diligence questions
Appendix B: AIMA Working Group
Appendix C: About AIMA
Appendix D: About the Sponsor