The fall of Lehman Brothers and Bear Stearns last year illustrated how dangerous it is for a hedge fund to be dependent on one prime broker. In some cases, for instance, assets held by Lehman were frozen in the London operation in the wake of the firm's bankruptcy. The trend since last September has been for hedge funds to use more than one prime broker.

One of the surviving prime brokers, J.P. Morgan, announced today that it's jointly offering with Sophis iSophis, a hosted software solution that can help assess and manage risk across multiple brokers. Sophis' platform evaluates product performance across a hedge fund and considers volatility, interest rates, agency ratings and other factors in its risk calculations. "We offer the possibility to visualize the VAR and analyze all the factors contributing to the VAR," says Samer Bollouk, global head of product management and business development.

The hosted iSophis platform takes in market data from the major providers and position data from the prime brokers or the hedge fund itself. It performs price calculations, benchmarking and rebalancing. It produces P&L analysis and risk metrics including Value At Risk. It can perform stress tests.

J.P. Morgan hopes to bring in more clients and to sell iSophis to its prime brokerage hedge fund clients.

"Hedge funds are looking for ways to manage risk, value their portfolios across multiple prime broker relationships, and monitor performance," said Lou Lebedin, co-head of J.P. Morgan's Prime Brokerage business. "Through iSophis we can now offer our clients an aggregate view of their assets held across all of their prime brokers which provides not only sophisticated cross-asset portfolio and risk management capabilities, but also instant and remote access to these reports through the power of an ASP."