Like Levi’s 501 jeans to the Israeli teen of the 1980s, prime brokerage is that rare commodity in Israel that any knowledgeable Israeli portfolio manager covets. It’s time to import prime brokerage wholesale so that the industry overall can benefit.

What is Prime Brokerage?

Prime brokerage is a suite of vital services that investment banks offer to their hedge fund clients.

Hedge funds typically access the securities markets through a number of executing brokers and settle transactions by instructing their custodian to deliver or receive cash or securities. The prime broker consolidates the clearing and settlement of securities transactions by settling the trade directly with the executing broker and acting as the custodian of the assets. This provides operational efficiencies for the client and consolidates reporting through a single entity, the prime broker. Prime brokers perform a number of additional core functions that contribute significantly to the success of hedge funds, such as cash management, securities and cash lending, and capital introduction.

Prime brokerage services do not exist in the Israeli market. With only five major banks and a small local market, the use case simply is not justified.........

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