Our articles are written by experts in their field and include individual barristers, solicitors, academics, judges, and leading firms in relevant areas of practice. JIBFL offers authoritative insights into global banking and financial law, providing essential updates for legal practitioners and policymakers. Covering key topics like lending, security interests, derivatives, debt capital markets, banking and finance related disputes, crypto, FinTech and financial regulation, JIBFL serves as a trusted resource for navigating complex legal challenges and staying informed in the financial sector. If you would like to contribute, please email Amanda.Cohen2@lexisnexis.com.
The FSB’s Consultation on Liquidity Preparedness for Margin and Collateral Calls: is it all about liquidity?
© Copyright LexisNexis 2024. All rights reserved.
The FSB consultation report on Liquidity Preparedness for Margin and Collateral Calls (https://www.fsb.org/2024/04/liquidity-preparedness-for-margin-and-collateral-calls-consultation-report/), responded to a number of high-profile loss-making transactions by various banks involved in lending against collateral comprised of large positions in single listed stocks. Recently, the most talked-about debacle was that of Archegos Capital Management (Archegos), the family office of Bill Hwang with total assets reported at around $36bn. In a nutshell, the prices of several stock positions held by Archegos dropped for different reasons and it could not post enough cash collateral, so some of the lending banks had to liquidatethe collateral shares. Some banks managed to exit their positions quickly, but other chose not to, and suffered substantial losses.
This article provides a detailed overview of the issues involved in such large transactions and highlights the key procedural requirements and potential regulatory developments needed.
If you are already a User, sign in
Or you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this article in full.
Alternatively you can subscribe here to read unlimited content.
