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From Sagar Chakraverty, Opalesque Asia:

"In the current economic environment, the multi-prime model transcends hedge fund size," said an independent study conducted by Pershing Prime Services, a subsidiary of the Bank of New York (BNY) Mellon Corporation. This study was also supported by Aite Group, an independent research and advisory on business, technology and regulatory issues, headquartered in Boston.

Traditionally, the $1bn plus hedge funds are the funds that operate in a multi-prime brokerage environment while smaller funds prefer single prime model to simplify their operations. But this scenario is changing fast as funds of all sizes now feel the need to upgrade to the multi-prime status in wake of heightened counterparty risk after the fall of Lehman Brothers.

"Having preferential borrowing rates from your prime broker was not much good if that prime broker, and all your assets, could be gone in the morning. What is most scary is that many people think they can change prime brokers over night when they can't. Fund that didn't have a second prime broker were in trouble because they couldn't just move their assets. It can take several weeks to months to get a new prime brokerage on board," said Alan Pace, Citi's head of prime finance for Americas.

Sang Lee, Managing Director of Aite Group recommends, "Hedge funds should take a long-term approach, relying on thei......................

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