A September 2012 Barclays report predicts that the cost of prime broker financing for hedge funds is likely to increase as regulatory changes increase prime brokers’ costs of funding.  The Barclays report outlines hedge funds’ historical sources of leverage and the ways that prime brokers borrow to finance their lending to hedge funds; summarizes pending regulatory changes that may affect prime broker financing; and discusses the implications of those changes for hedge funds.  This article summarizes key takeaways from the Barclays report.