For example, a hedge fund that faces a minimum margin requirement when it uses repo borrowing to fund a corporate-bond position may instead seek to take a leveraged position in the corporate bond through other means by, for example, engaging in a total-return swap with its prime broker. This is the growing business of “synthetic” prime brokerage.
Properly harmonized initial margin requirements on uncleared derivatives may help to level the playing field between traditional and synthetic prime brokerage activities. 14  Financial Stability Board (2013), Strengthening Oversight and Regulation of Shadow Banking: Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos (PDF) , August 29.