prime brokerage

--prime-brokerage units of the major banks, which make big money by lending to hedge funds, as well as helping the funds manage their cash and short stocks by borrowing and selling shares as a bet on falling prices. --Prime brokers like Morgan Stanley, which has one of the largest businesses catering to hedge funds, have made repurchase agreements so expensive that some funds are going to rival firms to borrow money, according to people familiar with the matter --Hedge funds often borrow money through a "repo" operation, a financing arrangement in which a hedge fund sells securities to banks in exchange for cash, while entering into an agreement to buy them back at a later date when they pay the money back. The interest rate that funds pay for this borrowed money has shot up in recent months. --The biggest players catering to hedge funds in recent years have been brokers such as Morgan Stanley, Goldman Sachs and Bear Stearns. These firms don't take deposits as a retail bank does, so they have less cash on hand. Large banks such as Citigroup Inc., UBS AG and Credit Suisse Group have large low-cost deposit bases, and some say they may be able to take some market share from the investment banks.