In the wake of the Bear Stearns and Lehman difficulties, many hedge fund managers have migrated toward a ‘multi-prime’ environment, in which more than one prime broker is utilized by the fund. On closer examination, a number of hedge funds have not only failed in their dual objectives of setting up a true multi-prime relationship and reducing their overall operational risk. Indeed, quite a few hedge fund firms have increased their operational risk without even realizing it. This article examines steps that hedge fund managers can take to achieve their objectives and enhance their operational risk profile.
Continue reading “Migrating Toward Multi-Prime: Did Your Manager Decrease or Increase Operational Risk?”