Alpaca, the API-first brokerage startup out of San Mateo, is preparing to offer trade financing services to hedge funds. That puts it on a path into prime brokerage, a business long run by large banks.
What Alpaca is building
The plan centers on adding financing, margin, and securities lending to its existing infrastructure, all aimed at institutional clients.
In July 2026, Alpaca raised $135 million in an equity round, part of a larger $435 million funding package earmarked for its API-first prime brokerage infrastructure.
The company’s total funding has surpassed $300 million. It supports millions of brokerage accounts across more than 40 countries, and it has reported significant growth in both revenue and trading volume.
Alpaca already counts hedge funds and proprietary trading firms among its users, offering them commission-free algorithmic trading, low-latency APIs, competitive margin rates, and access to easy-to-borrow securities.
The plumbing behind the pitch
Alpaca is a FINRA-regulated, self-clearing broker-dealer, meaning it handles the clearing of its own trades rather than renting that function from someone else.
It has also secured memberships with the DTCC, OCC, and FICC, the institutions that sit at the center of US securities, options, and fixed income clearing. On top of that, it has picked up Nasdaq exchange membership.
Alpaca has custodied a significant portion of tokenized US equities, giving it a foothold where traditional stock markets and blockchain-based assets overlap.
It has also partnered with Bybit to enable trading in US stocks and ETFs, a tie-up announced in October 2026. Kraken is another platform Alpaca works with as digital asset exchanges look to bolt equities onto their offerings.
What this means for hedge funds and the banks that serve them
Alpaca’s pitch leans on lower costs, faster execution, and an API-first design built for algorithmic strategies.
Alpaca’s $435 million funding package gives it a meaningful war chest. Whether that is enough to compete at scale with institutions that have operated in this space for decades is the open question.
Disclosure: This article was edited by Vivian Nguyen. For more information on how we create and review content, see our Editorial Policy.