Clear Street Completes UK And European Equities Build With London Stock Exchange Clearing Membership
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March 29, 2021 - Swiss Bank Credit Suisse today released the following Trading Update, which is widely assumed to be related to the inability of Bill Hwang's Family Office Archegos Capital to settle margin calls on its positions held with the Prime Brokerage arm of Credit Suisse and other banks:
A significant US-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks. Following the failure of the fund to meet these margin commitments, Credit Suisse and a number of other banks are in the process of exiting these positions. While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first quarter results, notwithstanding the positive trends announced in our trading statement earlier this month. We intend to provide an update on this matter in due course.
Nomura has also reported a significant potential loss of $2 billion. According to a Bloomberg report, Goldman Sachs, "is telling investors the impact on its financial results will probably be immaterial. Deutsche Bank said it escaped too." Morgan Stanley is still to confirm whether it has had any material impact from unwinding of Archegos positions in the market.
Archegos had highly concentrated positions in media and US-listed Chinese technology stocks, held via bespoke Swaps, akin to contracts for difference, with total exposure said to be as large as $50 billion.
Analysts at Berenberg estimated the trading loss to Credit Suisse of 3 billion Swiss francs.
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