While large custody and clearing banks have traditionally focused on mutual funds and pension plans, they are beginning to eye the higher-margin prime brokerage business of hedge funds, Bloomberg reports.

Because of the risks involved, and the low credit ratings typically assigned to hedge funds, custodians have shunned this business. But with hedge fund assets doubling in the past six years to $1.3 trillion and projected to reach $2 trillion in another three, custodians are taking notice.

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