"You don't know whether the liquidity pool is required by the ratings agencies, or whether it is required by the Federal Reserve," Hintz said. "I suspect there's something of both. But it's a recognition that the old contingency funding plans had a flaw, and that these events can happen very quickly."
Hedge funds have changed their business practices to protect themselves from the collapse of a prime broker, limiting the amount of funding that securities firms can get from such relationships, said Allan Yip, a former in-house prime-brokerage lawyer for Bear Stearns.
Repledging Assets
Many funds now restrict the ability of securities firms to repledge assets to obtain funding, a process known as "rehypothecation," Yip said. More funds stipulate that their cash must be held in separate bank accounts.
"This has been a market-driven change, in terms of what liquidity can be obtained by the banks," said Yip, who now advises hedge funds on prime-brokerage and trading documentation as a partner in London at law firm Simmons & Simmons LLP.
Not that the funds have to worry. It's probable the central bank would again lend to a big firm such as Morgan Stanley if another crisis hit, said Viral Acharya, a New York University finance professor who serves as an academic adviser to the Fed, according to the university's website.
For hedge funds, "it's basically like you get the too-big- to-fail benefit from being connected to a large financial firm," Acharya said. "If you dealt with a small prime broker, say a boutique investment firm, it's unlikely to be bailed out."