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Securities Finance

Enhanced Custody

When evaluating a financing provider and the risks associated with traditional prime brokerage, it makes sense to consider alternative ways to finance your long/short portfolios.

Using our global Enhanced Custody solution, you can borrow and finance securities directly with State Street within a segregated custody account. This provides a new channel for financing, while giving you greater visibility and control over your assets.

It can also simplify your operations and help you more efficiently manage your risk, compliance, financial reporting, collateral and general oversight functions.

A stable, differentiated financing option

Unlike traditional brokerage the majority of our financing does not rely on the short-term, wholesale funding market.

As an Enhanced Custody client, you have several ways to finance your portfolio:

  • Cash
  • Memo Pledge — Securities are “pledged” to State Street as collateral. Absent a default event, these securities remain in your custody account and may not be rehypothecated by State Street.
  • Self-Finance — You may lend your fund’s long positions to generate cash collateral.Self Borrow: You may also borrow securities from accounts within the same legal entity. This arrangement requires no financing.

Greater asset safety

Custodied securities are segregated from those of other clients. State Street does not “pool” assets in the manner of a traditional prime brokerage program. As a result, State Street’s Enhanced Custody product may result in less credit risk than that of a traditional prime brokerage program.

Backed by our global service and support model for alternatives, Enhanced Custody is a valuable financing alternative for an evolving regulatory environment.