Finadium LLC (Finadium), in conjunction with BNY Mellon, has released a white paper highlighting the potential for growth in the use of prime custody services by hedge funds (White Paper).  Since the 2008 financial crisis, hedge funds have used less leverage, which has led to increased demand for custodial services for holding unencumbered assets.  On recent trends in the use of leverage by hedge funds, see “Federal Reserve Credit Officer Survey Identifies Trends in Prime Broker Credit Terms, Hedge Fund Leverage and Counterparty Risk,” Hedge Fund Law Report, Vol. 5, No. 17 (Apr. 26, 2012).  Finadium estimates that $684 billion in fund assets may be available for prime custody services.  Prime custody arrangements offer funds potential cost savings and protection from the risk of the bankruptcy of a prime broker or other counterparty.  This article summarizes the key findings from the White Paper.  See also “Hedge Funds Turning to Prime Brokerage Trust Affiliates For Added Protection Against Prime Broker Insolvencies,” Hedge Fund Law Report, Vol. 2, No. 25 (Jun. 24, 2009).