With the recent upheaval in the credit markets generally and in the prime brokerage industry specifically, it has become increasingly important for hedge funds to structure their prime brokerage arrangements to include protections against a potential liquidation of the prime broker or bankruptcy of the prime broker’s holding company.  Key considerations include: the use of multiple prime brokers, collateral policies, rehypothecation rights, margin requirements, margin lock-ups and margin lock-up termination events.  As evidenced by recent prime broker failures or near-failures, the structure of prime brokerage arrangements can have a profound impact on a fund’s access to its own cash and securities at precisely the time when it needs them most.