Archegos Capital is finally about to bite the dust, leaving behind a trail of destruction.
The day has finally come.
Ill-fated hedge fund Archegos Capital is finally about to bite the dust and be castigated into the annuls of history, leaving behind a trail of destruction, which includes a number of Tier 1 banks having been so badly affected that their stock prices are in the gutter whilst others flourish.
As if watching HSBC, which had no involvement with Archegos, declare an incredible 80% increase in pre-tax profit. Yes, profit, in the first quarter of 2021, whilst the banks that got themselves involved with Archegos plunge into a situation which has caused them to go from anticipating huge earnings and healthy stock prices to scratching their chins and worrying immensely about their capital position.
Household names including Switzerland’s Credit Suisse and UBS, American giant Morgan Stanley, and Japan’s Nomura, MUFG and Mizuho together lost more than £7billion.
All of these are Tier 1 FX interbank dealers with significant market share and are supposed to be astute risk managers. They are the ones, after all, which curtailed counterparty credit to OTC derivatives brokerages - their
key clients and Liquidity takers - stating that OTC FX liquidity agreements could result in default.
As a result, many good quality FX counterparties, which are genuine experts at Risk Management, went off to seek better service from their providers, hence, non-bank market makers now dominate the Tier 1 FX dealing sector, ahead of 17-year top-slot dominant force, Citigroup.
Hardly surprising, when banks treat their core Tier, 1 liquidity customers, with trepidation yet allow themselves to get fleeced by a fly-by-night hedge fund to the extent that it almost brings the banks into insolvency to the potential detriment of their public shareholders and investors.
Today, the legal tug of war begins, as Archegos has hired restructuring advisers to prepare to wind down the firm, as the banks weigh up lawsuits to scrape back their losses.
They will need a strong tailwind and some degree of good luck. It is very rare that the civil courts favor banks, especially those who made negligent decisions due to sensing a potential quick gain without considering the consequences that could adversely affect shareholders and customers.
Some of the banks involved are examining whether they were ‘fraudulently induced’ to do business with Archegos. End result? Yet more costs pour on the fire as the lawyers take the banks which are now desperate for retribution and restoration of their reputation for as much as they can.
It's like the old phrase about who wins during a divorce battle: the lawyers.
Mr. Hwang, who founded Archegos Capital Management, has a record behind him too. In 2012, he pleaded guilty to insider trading of Chinese stocks. This makes it even more of a travesty.
The Prime Brokerage divisions of major banks will look down their noses at order flow sent from good quality, long-established FX firms with incredibly astute risk management executives and years of expertise, yet they will allow a former criminal to come out of nowhere and take them down for $7 billion.
The best thing for these banks to do would be to draw a line under it rather than exert their anger via lawyers. We all know that the cost of this will rile shareholders even more who have already been subjected to irrecoverable losses.
It is clear that bankrupt firms are not sources of restitution. It is impossible to claw anything back from a failed business, and even if restructuring consultancies are hired, they will charge a consultancy rate and take often as much as 70 cents on the dollar. Thus, even if a tiny bit was recovered, it would be 30 cents on the dollar for the banks.
Rather astonishingly, Mr Hwang remains heralded as one of the greatest traders on Wall Street in recent times and almost has celebrity status.
What constitutes a celebrity is very odd these days...
Andrew Saks is Head of Research and Analysis at ETX Capital
The day has finally come.
Ill-fated hedge fund Archegos Capital is finally about to bite the dust and be castigated into the annuls of history, leaving behind a trail of destruction, which includes a number of Tier 1 banks having been so badly affected that their stock prices are in the gutter whilst others flourish.
As if watching HSBC, which had no involvement with Archegos, declare an incredible 80% increase in pre-tax profit. Yes, profit, in the first quarter of 2021, whilst the banks that got themselves involved with Archegos plunge into a situation which has caused them to go from anticipating huge earnings and healthy stock prices to scratching their chins and worrying immensely about their capital position.
Household names including Switzerland’s Credit Suisse and UBS, American giant Morgan Stanley, and Japan’s Nomura, MUFG and Mizuho together lost more than £7billion.
All of these are Tier 1 FX interbank dealers with significant market share and are supposed to be astute risk managers. They are the ones, after all, which curtailed counterparty credit to OTC derivatives brokerages - their
key clients and Liquidity takers - stating that OTC FX liquidity agreements could result in default.
As a result, many good quality FX counterparties, which are genuine experts at Risk Management, went off to seek better service from their providers, hence, non-bank market makers now dominate the Tier 1 FX dealing sector, ahead of 17-year top-slot dominant force, Citigroup.
Hardly surprising, when banks treat their core Tier, 1 liquidity customers, with trepidation yet allow themselves to get fleeced by a fly-by-night hedge fund to the extent that it almost brings the banks into insolvency to the potential detriment of their public shareholders and investors.
Today, the legal tug of war begins, as Archegos has hired restructuring advisers to prepare to wind down the firm, as the banks weigh up lawsuits to scrape back their losses.
They will need a strong tailwind and some degree of good luck. It is very rare that the civil courts favor banks, especially those who made negligent decisions due to sensing a potential quick gain without considering the consequences that could adversely affect shareholders and customers.
Some of the banks involved are examining whether they were ‘fraudulently induced’ to do business with Archegos. End result? Yet more costs pour on the fire as the lawyers take the banks which are now desperate for retribution and restoration of their reputation for as much as they can.
It's like the old phrase about who wins during a divorce battle: the lawyers.
Mr. Hwang, who founded Archegos Capital Management, has a record behind him too. In 2012, he pleaded guilty to insider trading of Chinese stocks. This makes it even more of a travesty.
The Prime Brokerage divisions of major banks will look down their noses at order flow sent from good quality, long-established FX firms with incredibly astute risk management executives and years of expertise, yet they will allow a former criminal to come out of nowhere and take them down for $7 billion.
The best thing for these banks to do would be to draw a line under it rather than exert their anger via lawyers. We all know that the cost of this will rile shareholders even more who have already been subjected to irrecoverable losses.
It is clear that bankrupt firms are not sources of restitution. It is impossible to claw anything back from a failed business, and even if restructuring consultancies are hired, they will charge a consultancy rate and take often as much as 70 cents on the dollar. Thus, even if a tiny bit was recovered, it would be 30 cents on the dollar for the banks.
Rather astonishingly, Mr Hwang remains heralded as one of the greatest traders on Wall Street in recent times and almost has celebrity status.
What constitutes a celebrity is very odd these days...
Andrew Saks is Head of Research and Analysis at ETX Capital
Experienced and prominent industry professional with 30 years of experience within the High Technology Sector, with emphasis on financial technology.
Founder of FinanceFeeds, and renowned commentator with a global understanding of the electronic trading industry.
StoneX’s Q2 FX and CFDs Revenue Jumps despite Trading Volume Drop
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/
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Don't miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!
Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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