The prime broker-neutral Merrill Middle Office Solution will initially be available to investment bank's prime brokerage clients in the US.

Powered by GlobeOp's open platform, Merrill says the system will provide hedge funds and their managers with middle and back office services on an independent platform, giving hedge funds the flexibility to work with multiple prime brokers.

Peter Donovan, head of financing client management at the bank, says as hedge funds add prime brokers, the cost and effort to consolidate data across the various systems increases.

"We developed the Merrill Middle Office Solution to give hedge funds access to the benefits of a multi-prime broker environment while simplifying the operational requirements," he adds.

GlobeOp says the platform utilises its global processing and servicing functions. The core product is a data consolidation engine, with overnight reconciliation of cash and security positions to multiple prime brokers and fund administrators. A centralised "data master" generates reports required by the hedge fund manager, including risk management reporting, performance measurement and attribution analytics. Hedge funds trading over the counter (OTC) derivatives are supported with full trade capture, valuation, collateral management and settlement service.

Jeff Penney, co-head of global markets financing and services at Merrill Lynch, says both start-up and established hedge funds are increasingly outsourcing middle and back office functions to multiple service providers.

"While other prime brokers may lock in their clients with a front-end system, our strategy is to facilitate the flexible, independent multiple-prime broker environment most hedge funds prefer, giving these hedge funds access to competitive pricing for financing and stock loan," says Penney.