Do I need to open a business checking or savings account for the fund?
The fund is not required to have a bank account separate from its brokerage account, and most prime brokers provide traditional banking services such as check writing and wire transfers. However, some brokerage houses will disburse funds to another account only in the name of the fund. In these instances, managers will need to open a separate bank account to conduct fund business. As part of their due diligence process, managers should make sure they understand what banking services the fund’s brokers will perform for the fund.
Some managers also prefer to open a separate fund bank account to hold subscription and redemption proceeds. While this adds a minor amount of operational complexity to the fund’s infrastructure, it can help to ensure that the manager does not unintentionally add leverage to the fund’s portfolio by trading funds received in advance of an effective contribution date, or funds that were previously redeemed but have not yet been paid out.
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