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> The only minor insight this affair gives is that a lot of fund managers are just taking bigger risks Really? I think there are several take aways that will

> The only minor insight this affair gives is that a lot of fund managers are just taking bigger risks Really? I think there are several take aways that will affect the markets for a while. 1) Prime brokers were blind to his exposure, using multiple prime brokers and also not having to report controlling interest in shares controlled by Swaps let one player control an amount of shares on single firms that no prime broker would ever let their clients control. I'm fairly certain we'll see some overhaul on the swap side to shed more light on what positions they hold, similar to what hedge funds have to file quarterly. 2) Family offices have kind of slid under hte radar, hedge funds have to file quarterly docs on what they hold and report when they control more than 5 or 10%, depending on the jurisdiction. Family offices side step this requirement due to a quirk in securities law. Again I expect this "loop hole" to be closed. 3) One firm essentially was responsible for most of the share price gain for a few individual stocks, specifically viacom where he bought almost all of viacoms share price appreciation. This bullying technique was common in the 80s bond markets due to the small number of players who could buy up bond positions to push them around. Those markets were reformed such that this doesn't really happen too often anymore. Bill, found a cunning way to do this in the securities markets. The SEC is going to look at t his very closely, remember their mandate is to have orderly markets and this ordeal was anything but orderly.

lordnacho 5y ago
But are those major? Major would be if someone could blow up so much that we take down Lehmans again, despite all the stuff that's been put in place since. The PB thing is interesting to me, I never took a massive position across PBs but I had assumed if I did they would ask whether I was doing the same trade everywhere. At least when executing FX trades electronically, they all said it was a big no-no to split the trade across banks. > I'm fairly certain we'll see some overhaul on the swap side to shed more light on what positions they hold, similar to what hedge funds have to file quarterly. I bet someone with a bit of crypto knowledge could invent a way to report this without revealing exactly who has what. At least it sounds like one of those zero knowledge games. The FO thing yeah, maybe they shouldn't have that loophole. Single price mover, yeah, I don't think it's healthy. In general I like transparency.
- 1234throwaway 5y ago
  fx pb broker dealer here (europ marketS) it not bad to split fx trade across multiple brokers they tell you not to do it so they get more biz and beter spread markouts
  - lordnacho 5y ago
    Yes but they can also tell if they don't make any money off you.
caffeine 5y ago
Agree that large holdings should be reported but disagree they FO should need to publish their portfolios, that seems like a massive violation of privacy.
quickthrowman 5y ago
> 3) This is the craziest part to me. Writing the swaps meant the the bank had to replicate the position they sold by purchasing shares and options to hedge. The volume of hedging activity is what pushed the price of the stocks up, then VIAC decided to take advantage of the high share price by doing a share offering, VIAC gapped down 7-8%, and Bill Hwang lost $20B. I wonder if the recent pullback in growth stocks is due to other family offices also gaining massive exposure via swaps, swaps that are being quietly unwound. Though, another round of panic selling by prime brokers would likely be obvious like Archegos blowing up was. Family offices should definitely be reined in, make them equivalent to hedge funds and call it a day.
- chii 5y ago
  > VIAC decided to take advantage of the high share price by doing a share offering this is actually what i'd expect a company to do, if their share price grew unexpectedly and "unreasonably". The fact that Archegos didn't anticipate this (which directly led to their demise) is a sign of incompetence imho.

lordnacho 5y ago

But are those major? Major would be if someone could blow up so much that we take down Lehmans again, despite all the stuff that's been put in place since. The PB thing is interesting to me, I never took a massive position across PBs but I had assumed if I did they would ask whether I was doing the same trade everywhere. At least when executing FX trades electronically, they all said it was a big no-no to split the trade across banks. > I'm fairly certain we'll see some overhaul on the swap side to shed more light on what positions they hold, similar to what hedge funds have to file quarterly. I bet someone with a bit of crypto knowledge could invent a way to report this without revealing exactly who has what. At least it sounds like one of those zero knowledge games. The FO thing yeah, maybe they shouldn't have that loophole. Single price mover, yeah, I don't think it's healthy. In general I like transparency.

1234throwaway 5y ago
fx pb broker dealer here (europ marketS) it not bad to split fx trade across multiple brokers they tell you not to do it so they get more biz and beter spread markouts
- lordnacho 5y ago
  Yes but they can also tell if they don't make any money off you.

caffeine 5y ago

Agree that large holdings should be reported but disagree they FO should need to publish their portfolios, that seems like a massive violation of privacy.

quickthrowman 5y ago

> 3) This is the craziest part to me. Writing the swaps meant the the bank had to replicate the position they sold by purchasing shares and options to hedge. The volume of hedging activity is what pushed the price of the stocks up, then VIAC decided to take advantage of the high share price by doing a share offering, VIAC gapped down 7-8%, and Bill Hwang lost $20B. I wonder if the recent pullback in growth stocks is due to other family offices also gaining massive exposure via swaps, swaps that are being quietly unwound. Though, another round of panic selling by prime brokers would likely be obvious like Archegos blowing up was. Family offices should definitely be reined in, make them equivalent to hedge funds and call it a day.

chii 5y ago
> VIAC decided to take advantage of the high share price by doing a share offering this is actually what i'd expect a company to do, if their share price grew unexpectedly and "unreasonably". The fact that Archegos didn't anticipate this (which directly led to their demise) is a sign of incompetence imho.