[HN Gopher] Archegos was too busy for margin calls ___________________________________________________________________ Archegos was too busy for margin calls Author : mlla Score : 54 points Date : 2021-08-03 19:59 UTC (3 hours ago) (HTM) web link (www.bloomberg.com) (TXT) w3m dump (www.bloomberg.com) | TrainedMonkey wrote: | Matt Levine did a pretty good writeup on this: | https://www.bloomberg.com/opinion/articles/2021-07-29/archeg... | glasss wrote: | I did enjoy reading through his updates about the situation as | it was developing, pretty interesting stuff. | | I don't remember the exact line Matt Levine wrote, but he made | a point of stating normally you couldn't get away with being | this over leveraged, but since Archegos was a family firm it | avoided some scrutiny. Interesting to think there will probably | always be a way to avoid scrutiny when you're moving that much | money around. | dang wrote: | We changed the URL from https://www.credit- | suisse.com/media/assets/corporate/docs/ab..., which is one of | those annoying links that downloads a file, and the title from | "Postmortem in finance: How Credit Suisse lost $6B [pdf]", which | was editorialized. (Please read the site guidelines! | https://news.ycombinator.com/newsguidelines.html) | | A user suggested the Levine article as a better alternative, so | we'll use that for now. If anyone knows a better URL, we can | change it again. | arthurcolle wrote: | How is a browser downloading an html file any different than | requesting a PDF other than size? If anything it's useful to be | able to pop it over into the Documents app and read later. | | I guess it's not responsive but to be honest that's a feature | not a bug lol. I guess the editorial concern is the bigger | issue. | gjvc wrote: | Some of the formatting of this document is remarkably poor. | mdlm wrote: | Who wrote this? | jeffbee wrote: | The authors are listed on page 1. | vmception wrote: | If you've ever traded with anything better than Reg-T margin, you | know this whole system is ripe for implosion. The leverage is | insane! | | Reg-T (like the kind Robinhood has) doesn't allow long options to | be bought on margin. Other margining systems allow as low as 6% | down even on options. | | And when you're talking real money, your personal risk/compliance | team understands their employment is contingent on looking the | other way! They're at-will employees too. | [deleted] | blunte wrote: | I cannot believe that Archegos was "too busy" to read a request | for additional collateral. They knew exactly what was going on, | and they were hoping to buy more time and pray that the market | would change in the direction they needed. | | This sounds like a desperation play that didn't succeed, and | Credit Suisse was left with the loss. | | Now, I'm not much educated in finance... but risk is risk, and | whether you have models or you have tarot cards, sometimes things | just do not go the way you thought they would. If you're betting | 1x, you can lose what you have. If you're betting with leverage, | you can win bigger, or lose 1x (and potentially the creditor can | lose the remaining Xx). Unless the creditor can automatically | liquidate and close out a client's position if they can't make a | margin call, it seems you would have to be crazy to be a creditor | for leveraged clients. Eventually you will lose big because of a | client. | baq wrote: | > Notably, this is not a situation where the business and risk | personnel engaged in fraudulent or illegal conduct or acted with | ill intent. Nor is it one where the architecture of risk controls | and processes was lacking or the existing risk systems failed to | operate sufficiently to identify critical risks and related | concerns. The Archegos risks were identified and were | conspicuous. The persistent failure of he business and risk to | manage and remediate the risks, and pervasive issues of business | competence and resourcing adequacy, described in detail in this | Report, require CS's urgent attention. | | wow. this reads like 'culprits have been found and let go with | their bonus packages'. | satellite2 wrote: | This is common practice in post mortem analysis to try to | determine the root cause in a blameless manner. | | On the next iteration of this issue the eventual culprits of | the first probably won't be there to remember what went wrong. | | What might survive until then though is the set of procedures | and guidelines put in place following the investigation | recommendations. | | So it's more effective to determine what process were | insufficient than which person had the capacity to avoid | something. ___________________________________________________________________ (page generated 2021-08-03 23:00 UTC)