The swift and unexpected collapse of Lehman Brothers and the subsequent difficulties faced by clients in retrieving their assets revealed some shortcomings in the prime brokerage model and the terms of prime brokerage agreements. The fallout has resulted in changes to market practice in terms of the way prime brokers deal with client assets.

This article examines the prime broker model, starting with the shortcomings revealed by the Lehman Brothers' insolvency, including the position of client money and client assets under typical prime broker agreements. It then examines the new trends that are emerging in relation to prime broker models and contractual arrangements, before discussing the potential regulatory changes that may affect this area.