Institutional Sales (IS) and Prime Brokerage (PB) — The Client-Facing Job: Hedge Funds, Asset Managers, and Pensions in One Career Guide (2026 Complete Guide)

06:30  Bloomberg + Reuters morning briefing, KOSPI prior close, foreign flows
06:50  Email "morning note" to 5 coverage PMs (1-line view + 3 trade ideas)
07:30  Arrive at desk, morning huddle with sector research analysts
08:00  Morning Meeting: global macro + sector views + S&T trader color
08:45  Sync with global desks via Hong Kong (post US close)
09:00  KOSPI open. Most active hour. Foreign flows + client calls
10:30  Lunch meeting 1: 1:1 with long-only PM (single-name view + position read)
12:00  Back to desk, log conversation, update CRM
13:00  Lunch meeting 2: hedge fund PM (idea pitch + execution plan)
14:30  Visit AM with sector specialist (analyst pairing)
15:30  Last 30 min before KOSPI close. Block trades, average price reporting
16:00  Post-mortem: best call / worst call / missed opportunities
17:00  Calendar prep for tomorrow, research publication schedule
18:00  Conference call with US desk (global wrap)
19:30  Client dinner: head of equity at top AM + own desk head
22:00  Dinner ends, draft tomorrow's morning note from home
23:30  Sleep. 6:30 again tomorrow.

Equity Sales
├─ Cash Equity Sales        — Cash equities, AM/pension coverage
├─ Long-Only Sales          — Long-only PM coverage only
├─ Hedge Fund Sales         — Hedge fund coverage only
└─ Sector Specialist Sales  — Semis, biotech, batteries specialist

FICC Sales
├─ Rates Sales              — Govies, IRS, swaps
├─ Credit Sales             — Corporate bonds, CDS
├─ FX Sales                 — Spot FX, NDF
└─ Commodities Sales        — Commodities (small in Korea)

Derivatives Sales            — Options, structured notes, warrants
Equity Capital Markets Sales — IPO/follow-on placement
Prime Brokerage Sales        — Cap intro + PB origination
Sales Trader                 — Sales/trader hybrid, quoting + execution

1. GC (General Collateral) vs Special
   ─ GC: ample float in the market, lending fee = 5-25bps/year
   ─ Special: extreme short demand, fee = 200-2000bps/year (GME 2021 hit 1000%+)
   ─ IS monitors short interest data to find names trending Special

2. Triparty Repo
   ─ Three parties: borrower (hedge fund) + lender (bank) + triparty agent
     (BNY Mellon, JPM, etc.)
   ─ Collateral valuation, marking, substitution handled by the agent
   ─ PB borrows cash on the hedge fund's behalf for financing

3. Rehypothecation
   ─ Collateral the hedge fund posts to PB gets reused by PB for its own funding
   ─ US: rehypothecation capped at 140% of customer debit (Reg T)
   ─ UK: no cap historically (why UK Lehman PB clients lost assets in 2008)
   ─ Post-2008, hedge funds explicitly state "rehypothecation cap" in PB
     contracts

US-based
├─ Bank of America Securities PB  — mid-cap HFs, equity PB
├─ Citi PB                        — multi-asset, FX, EM strength
└─ Wells Fargo (small)

Europe-based
├─ UBS PB                         — Equity PB strength, Swiss base
├─ BNP Paribas PB                 — Europe #1 after Deutsche Bank PB acquisition
├─ Société Générale PB            — Equity derivatives PB strength
└─ Barclays PB                    — UK-based, FI PB

Asia-based
├─ Nomura International PB        — covers Japanese HFs
├─ Daiwa Securities PB            — Japan + Asia
└─ Mitsubishi UFJ Trust PB        — Custody-focused

1. Cold Call / Onboarding
   ─ Pick up news of a new fund launch → first call → meeting
   ─ Compliance: KYC, AML, FATCA paperwork (2-6 weeks)

2. Periodic Touch
   ─ Daily morning note + weekly recap
   ─ Monthly sector deep-dive
   ─ Quarterly position review

3. Pitch
   ─ Call within an hour of research publication
   ─ Trade idea: entry, exit, size, risk

4. Execution
   ─ Sales hands the order to the trader
   ─ VWAP, TWAP, IS algo, or block
   ─ Large orders are sliced via program trading

5. Post-Trade
   ─ Average price + TCA (Transaction Cost Analysis)
   ─ Slippage report
   ─ Wallet share tracking

6. Annual Review
   ─ Annual review meeting with the client
   ─ Wallet share negotiation for the next year
   ─ Core input into sales compensation

The four-step Cap Intro flow

Step 1: Sourcing
   ─ PB maintains a pool of hundreds of new/growing hedge fund managers
   ─ Strategy, AUM, performance, risk profile in a database

Step 2: Investor Mapping
   ─ Regular meetings with allocators (family offices, FoF, endowments,
     pensions)
   ─ Each LP's mandate: equity L/S? Macro? Credit?

Step 3: Matching Event
   ─ Quarterly Cap Intro conferences (Goldman, MS run separately in Tokyo,
     Hong Kong, New York)
   ─ 30 hedge funds + 60 LPs co-located in one venue
   ─ 1:1 speed-dating format (25 minutes each)

Step 4: Follow-up
   ─ PB manages follow-up for both sides
   ─ Due diligence packs, NDA coordination
   ─ Allocation decision → that hedge fund grows AUM → PB book grows

# Securities Lending revenue example
# A hedge fund wants to short 100,000 shares
# Stock: hypothetical KOSPI name X at KRW 50,000

stock_price = 50_000  # KRW
shares_borrowed = 100_000
notional = stock_price * shares_borrowed  # KRW 5,000,000,000 (5bn won)

# 1) Lending fee the hedge fund pays to PB
borrow_rate = 0.0050  # 50bps (GC average)
# If Special: up to 0.10 (10%)
daily_lending_fee = notional * borrow_rate / 360
# = 5_000_000_000 * 0.005 / 360 = KRW 694,444 per day

# 2) Lending fee PB pays to the actual asset holder (pension, AM)
lender_payout = notional * 0.0030 / 360  # 30bps
# = KRW 416,666 per day

# 3) PB's spread
pb_spread_daily = daily_lending_fee - lender_payout
# = 694,444 - 416,666 = KRW 277,778 per day
# Annualized ≈ KRW 100M/year per single position

# Special name (e.g., GameStop in 2021)
special_rate = 1.00  # 100% APR
daily_special_fee = notional * special_rate / 360
# = 5_000_000_000 * 1.00 / 360 = KRW 13,888,888 per day
# Annualized ≈ KRW 5bn per year per single position

# Margin Financing mechanics
# Hedge fund equity $100M, 2x leverage to long $200M

hedge_fund_equity = 100_000_000  # $100M
target_gross = 200_000_000  # $200M
borrowed_from_pb = target_gross - hedge_fund_equity  # $100M

# PB financing rate
risk_free_rate = 0.045  # 4.5% (Fed funds)
pb_financing_spread = 0.0075  # 75bps
financing_rate = risk_free_rate + pb_financing_spread  # 5.25%

annual_financing_revenue = borrowed_from_pb * pb_financing_spread
# = 100_000_000 * 0.0075 = $750,000 per year

# Margin requirement
initial_margin = 0.30  # Reg T 30% (US equity)
maintenance_margin = 0.25  # Reg T 25%
hedge_fund_required_equity = target_gross * maintenance_margin
# = 200_000_000 * 0.25 = $50M (below this triggers margin call)

# If the position is down -25% → equity = $100M - $50M = $50M
# Exactly at maintenance margin → margin call imminent

Archegos timeline

T-0: Late 2020 - early 2021
   ─ Archegos accumulated concentrated TRS positions in ViacomCBS, Discovery
   ─ TRS counterparties: Goldman, MS, Credit Suisse, Nomura, UBS, MUFG
   ─ Each PB did not know how much Archegos had borrowed from the others
     (the OTC nature of TRS)

T-1: 2021-03-22 (Mon)
   ─ ViacomCBS announced a capital raise → stock -23% in one week
   ─ Archegos equity started eroding

T0: 2021-03-24 (Wed)
   ─ Goldman, MS issued margin calls to Archegos
   ─ Archegos could not meet the calls

T+1: 2021-03-25 (Thu)
   ─ PBs held secret coordination meetings → coordinated unwind agreement failed
   ─ Goldman and MS started block-trade liquidation first

T+2: 2021-03-26 (Fri)
   ─ Credit Suisse and Nomura started liquidating late
   ─ Stocks already collapsed → outsized losses

Losses
   ─ Credit Suisse: $5.5B (a major factor in CS's later demise)
   ─ Nomura: $2.9B
   ─ Morgan Stanley: $1.0B (smaller because they sold early)
   ─ Goldman: about $0 (sold first)
   ─ UBS, MUFG: about $0.7B each

What Lehman PB clients lost

1. Custody Risk
   ─ Hedge funds with assets at Lehman PB had assets frozen
   ─ UK PB clients: unlimited rehypothecation → assets were trapped in Lehman
     financing
   ─ US PB clients: 140% rehypothecation cap → some assets were recoverable
   ─ UK PB clients took 4-7 years to recover

2. Funding Run
   ─ Hedge funds rushed to move PB to other banks
   ─ GS, MS, JPM saw a revenue surge from absorbing Lehman clients
   ─ Even MS hit funding stress, secured $9B investment from MUFG

3. Regulatory Response
   ─ Dodd-Frank Act (2010) — capital rules on PB activity
   ─ Volcker Rule — limited proprietary trading
   ─ Basel III — higher risk weight on hedge fund exposure

Outcomes
   ─ Multi-PB structure became standard for large hedge funds
   ─ Rehypothecation caps written into PB contracts
   ─ Stronger risk management for tri-party repo

# PB concentration risk monitoring example
import pandas as pd

# PB book by hedge fund exposure
hedge_funds = pd.DataFrame({
    'fund_name': ['Macro_HF_A', 'Equity_LS_B', 'Multi_Strat_C', 'Credit_D'],
    'gross_exposure_usd_bn': [12.0, 8.0, 25.0, 5.0],
    'net_exposure_usd_bn': [3.0, 2.0, 1.5, 4.0],
    'leverage': [4.0, 4.0, 16.67, 1.25],
    'top_position_pct': [0.15, 0.08, 0.05, 0.25],
})

# Concentration metrics
total_gross = hedge_funds['gross_exposure_usd_bn'].sum()
hedge_funds['pct_of_pb_book'] = (
    hedge_funds['gross_exposure_usd_bn'] / total_gross
)

# Risk flags
hedge_funds['flag_high_leverage'] = hedge_funds['leverage'] > 10
hedge_funds['flag_concentrated'] = hedge_funds['top_position_pct'] > 0.10
hedge_funds['flag_large_in_book'] = hedge_funds['pct_of_pb_book'] > 0.30

# Margin call simulation
def margin_call_required(gross, equity, mm_pct=0.25):
    """Maintenance margin = 25%"""
    required_equity = gross * mm_pct
    return max(0, required_equity - equity)

# VaR for the PB book
# 95% confidence, 1-day horizon, parametric VaR
import numpy as np

portfolio_vol_daily = 0.018  # 1.8% daily vol
var_95 = 1.645 * portfolio_vol_daily * total_gross
# = $1.49B (single-day 95% VaR for a $50B book)

Year 1-3: Junior Associate / Analyst
   ─ Morning notes, data prep
   ─ Shadowing senior client meetings
   ─ CRM management, compliance paperwork
   ─ KPI: morning note accuracy, follow-up speed

Year 3-6: Senior Associate
   ─ Own coverage (5-10 small AMs)
   ─ Joint AM visits with senior colleagues
   ─ Pitching small trade ideas
   ─ KPI: wallet share growth, commission

Year 6-10: VP
   ─ Lead coverage on large AMs / hedge funds
   ─ Mentoring juniors
   ─ Leads quarterly review meetings
   ─ KPI: wallet share, cross-sell, new client onboarding

Year 10-15: Director / Executive Director
   ─ Strategic relationship with top-tier clients
   ─ Sector / Product head
   ─ KPI: portion of desk P&L

Year 15+: Managing Director (MD)
   ─ Head of Equity Sales, Head of PB, etc.
   ─ Hiring, P&L ownership
   ─ Regular dialogue with Compliance + Risk
   ─ KPI: total desk P&L

Weeks 1-2: Firm + systems
   ─ Memorize 30 core Bloomberg screens (TOP, ECO, WEI, BBLG, NSE, etc.)
   ─ Learn the desk's CRM (Salesforce, Sales Connect, internal tool)
   ─ Complete compliance training (mandatory at every firm)
   ─ Understand morning meeting format and per-manager role

Weeks 3-4: Markets + research
   ─ 30-min 1:1 with each of the desk's 5 sector research analysts
   ─ Read 50 research reports from the last year
   ─ Draft daily morning notes (reviewed by senior)

Weeks 5-6: Clients + coverage
   ─ Memorize senior's client list (PM names, strategy, AUM)
   ─ Analyze each client's last 12 months of trading patterns
   ─ Shadow 5-10 client meetings

Weeks 7-8: Trading + execution
   ─ Sit next to the sales trader for a week (how quotes work, how to hit
     average price)
   ─ When to use VWAP, TWAP, or IS algo
   ─ How to read a TCA report

Weeks 9-10: PB / FICC fundamentals
   ─ 30-min meeting with the firm's PB / FICC head (cross-product context)
   ─ Visit the securities lending desk
   ─ Study margin financing mechanics

Weeks 11-12: First independent calls
   ─ Start independent calls on 1-2 small accounts (senior present)
   ─ Pitch one trade idea (with senior in the room)
   ─ Post-mortem + feedback session

Salesperson A's five years

Year 1-2: Pitches whatever is hot, "this name is going to rip"
   ─ Hits a couple of times, wallet share grows
   ─ PM calls them "fun to talk to"

Year 3: Three wrong pitches in a row
   ─ Did not understand the sector view but repeated it anyway
   ─ PM starts cutting commission share

Year 4: Attempts cross-sell, pitches PB services
   ─ But PM is already in "trust eroded" mode
   ─ Wallet rotates to another salesperson

Year 5: Performance review with desk head
   ─ Wallet share -40% YoY
   ─ Bonus 0%
   ─ Tries to move buy-side, blocked at reference check

Salesperson B's five years

Year 1-2: Weekly sector deep-dive, clearly stated views
   ─ Wallet share is small at first
   ─ PM calls them "the one who does their homework"

Year 3: Consistent view in one sector, post-mortem when wrong
   ─ PM puts them at #1 priority for periodic meetings
   ─ Wallet share grows slowly

Year 4-5: When that PM scales the fund, gets bridged to PB
   ─ Successful cross-sell
   ─ Bonus jumps materially

Required reading
   ─ "The Big Short" — Michael Lewis (2008 crisis, hedge fund lens)
   ─ "More Money Than God" — Sebastian Mallaby (hedge fund history)
   ─ "Liar's Poker" — Michael Lewis (Salomon Brothers, sell-side sales origins)
   ─ "Flash Boys" — Michael Lewis (electronic trading, dark pools, HFT)
   ─ "When Genius Failed" — Roger Lowenstein (LTCM collapse)

PB / Securities Lending specialty
   ─ "Prime Brokerage" — Diane Pillitteri
   ─ Risk.net Prime Services section (subscription)
   ─ Hedge Fund Intelligence reports

News / daily
   ─ Bloomberg + Reuters (essential)
   ─ Financial Times Alphaville (FT Alpha)
   ─ Risk.net (PB / risk specialty)
   ─ Institutional Investor (HF industry)

Korea / Japan specific
   ─ Mark to Market (Korea)
   ─ The Bell (Korea IB)
   ─ Tokyo Financial Daily
   ─ Nikkei Asia