Prime Broker
A firm that gives a large trader one account for financing, trading across multiple venues, and settlement.
In equities, a prime broker consolidates a client's positions, lends securities and cash, and settles through a central clearinghouse that stands between buyers and sellers. Digital-asset spot markets have no central clearinghouse, so a crypto prime broker is typically the direct counterparty, and often the custodian too, which concentrates in one balance sheet the credit exposure that equity prime brokerage distributes. Some providers address this with off-exchange settlement, where assets stay in a segregated custody account and only net obligations move to the trading venue. Readers meet the term in institutional trading and borrowing arrangements and in the wind-downs that follow a provider's failure.
In de praktijk
Off-exchange settlement arrangements let a trading firm post collateral to a custodian that mirrors credit at the exchange, so the assets never sit on the exchange's balance sheet.
Het veelvoorkomende misverstand
That crypto prime brokerage carries the same protections as its equity namesake, when the absence of central clearing means the client's exposure is to the prime broker's own solvency.