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That's a succinct but false explanation. DTCC does not care if a HF is about to lose a bunch of money and maybe even put a prime brokerage on the hook. Hedge fu
by xadhominemx 6y ago
That's a succinct but false explanation. DTCC does not care if a HF is about to lose a bunch of money and maybe even put a prime brokerage on the hook. Hedge funds make and lose hundreds of billions every week. No prime brokerage would let Melvin end up near insolvency before issuing liquidation margin call and even if there wasn't enough post-liquidation to cover losses, prime brokerages have a collective market cap of more $1 trillion and are easily able to absorb a several billion dollar shortfall. It's obvious to anyone who knows what they're talking about that you are a financial neophyte inventing nonsense conspiracies.
- Rastonbury 6y agoA lot of that crowd here, at least on wsb people don't take themselves so seriously!
- oysterberry 6y agoCan you explain why the collateral required is higher (if no one has any insolvency issues)? If you watch the video I posted in the parent comment with the webull ceo, he states the exact scenario where brokers have no problem margin calling a small retail account, but for a big firm and big losses it's problematic, and so do you have more to add than the webull ceo on this topic? I encourage the discussion and the information you added. Prime brokerages may be able to absorb the damage and thus are able to post the collateral needed, but then if the smaller brokerages like robinhood also need to post the same collateral while having smaller risk of clearing problems, isn't that the problem of the risk spreading?