Commercial Awareness Discussion Thread

Daniel Boden

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  • Sep 6, 2018
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    Has anyone been following the situation with Archegos? I was wondering if anyone had any thoughts on whether there are any specific legal issues involved or if there are any broader implications to this?
    Not sure about legal issues but I think there could be some real commercial implications with the amount of leverage that banks are willing to lend hedge funds in future! If banks decide to reduce their exposure and reduce the amount of leverage they give to HFs (as they wouldn't want to take the losses that Nomura and Credit Suisse have done - estimated to be around $2bn and $3-4bn respectively!) then that could have a real impact on the level of deals and investments that HFs can do in the future and indeed the companies that will need this level of financing from a HF!
     
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    Sam55

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    Jan 28, 2020
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    Not sure about legal issues but I think there could be some real commercial implications with the amount of leverage that banks are willing to lend hedge funds in future! If banks decide to reduce their exposure and reduce the amount of leverage they give to HFs (as they wouldn't want to take the losses that Nomura and Credit Suisse have done - estimated to be around $2bn and $3-4bn respectively!) then that could have a real impact on the level of deals and investments that HFs can do in the future
    Yeah I definitely agree here- seems like nomura and credit suisse got really screwed over when MS and GS started dumping all their shares
     

    Matt_96

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  • Dec 15, 2018
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    Not sure about legal issues but I think there could be some real commercial implications with the amount of leverage that banks are willing to lend hedge funds in future! If banks decide to reduce their exposure and reduce the amount of leverage they give to HFs (as they wouldn't want to take the losses that Nomura and Credit Suisse have done - estimated to be around $2bn and $3-4bn respectively!) then that could have a real impact on the level of deals and investments that HFs can do in the future and indeed the companies that will need this level of financing from a HF!

    Wasn't the whole reason Archegos ended up being so overleveraged something to do with the fact that it was structured as a family office rather than a traditional hedge fund and therefore didn't have as much scrutiny? That was my takeaway anyway.
     
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    Daniel Boden

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    Wasn't the whole reason Archegos ended up being so overleveraged something to do with the fact that it was structured as a family office rather than a traditional hedge fund and therefore didn't have as much scrutiny? That was my takeaway anyway.
    Yeah it was a family office and so has far fewer regulatory requirements e.g. a much-reduced amount of financial reporting but hedge funds generally do have a lot of leverage hence why I think it could have industry-wide implications going forwards
     
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