Archegos Capital prepares for insolvency proceedings

Karthik Subramanian

Archegos Capital, the troubled capital management firm, is preparing for insolvency proceedings as banks that handled its funds are trying to recoup their losses from it.

Gain Capital's Peter Quick buys $280,000 of stock

The firm, which is supposed to be the family office of former Tiger Asia manager Bill Hwang, defaulted on payments for its margin calls leading to huge losses for the banks that handled its trades. The situation came about due to the big drop in the share value of ViacomCBS.

The capital management company had a lot of exposure to ViacomCBS and as its share price started falling, the banks demanded more and more collateral from Archegos Capital to cover the positions. The firm was not able to top up its account due to a lack of funds and this led to margin calls. It was one of the most shocking events of 2021 on the Wall Street.

Various banks around the world are expected to have lost around $10 billion due to this and this includes banks like Credit Suisse, Nomura Holdings and Morgan Stanley. As these banks demand the money back, Archegos is looking to find other legal options available to it to see how much damages are likely to be claimed and how these can be claimed.

Questions abound as to why the firm was given such a long rope by the banks and why they did not seek to close the trade positions at the first hint of a loss. It is only due to the fact that these banks chose to wait in the hope that the firm would return back the money that the losses began to pile up and crucial time was lost waiting for funds that never came in from the firm.

It is also to be noted that retail traders are seldom given this liberty and at the end of the day, it is these traders who are left holding the bag. Their accounts get closed at the first hint of trouble and these losses suffered by the various banks also need to be paid for, in one way or the other, by the retail traders and investors.

The lessons learned from the market crash in 2008 seem to have been conveniently forgotten and it is generally felt that the regulators like the SEC need to crack their whip in such situations so that the banks do not cross the line and are held to account. It remains to be seen what kind of action is going to be taken by the regulators and the fallout is likely to be closely monitored by the traders and the investors.

Read this next

Metaverse Gaming NFT

DCentral Miami brings together all of Web3, NFT, DeFi, Metaverse

The world’s biggest Web3 meeting entitled DCENTRAL Miami is set to take place November 28-29, featuring a lineup of some of the biggest and most influential names in the blockchain space.

Digital Assets

Crypto ban expands across UK banks as Starling joins ‎crackdown

UK digital bank Starling has banned ‎all customer payments related to cryptocurrencies, another blow for the crypto traders ‎who recently saw a sizable number of banks deciding not to ‎finance the wobbly asset class.‎


Markets Direct at FIA EXPO 2022: Traders know what they want from brokers

The FIA Expo 2022, one of the most prestigious events within the global derivatives trading industry, took place in Chicago on 14 & 15 November.


FIA Expo 2022: TNS addresses public cloud limitations with hybrid infrastructure

November is the month of the FIA Expo, one of the largest futures and options conferences in the world, bringing together regulators, exchanges, software vendors, and brokers in one place: the Sheraton Grand Chicago Riverwalk. 

Retail FX

Italy’s regulator blacks out Finance CapitalFX, MFCapitalFX

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

Suspected leader of Honk Kong ramp-and-dump scam appears in court

A leader of a sophisticated ramp-and-dump scheme made his first court appearance in a Hong Kong court today, charged with market manipulation and various criminal offences. The case stems from an earlier joint operation of Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), and the local police. 

Institutional FX

Cboe’s James Arrante discusses growing demand for fixed income, FX algo

We caught up with James Arrante, senior director of FX & US treasuries product and business management at Cboe Global Markets, to uncover emerging trends in the FX and fixed income markets and learn more about the bourse operator’s recent initiatives.

Retail FX

Eurotrader acquires UK broker Petra Asset Management

Eurotrader Group has formally entered into the UK market with the acquisition of FCA-regulated broker, previously named Petra Asset Management Ltd. The new entity operates under the brand name Eurotrade Capital Ltd.

Inside View, Retail FX

The Game of Chess Continues – OPEC, China and the Oil Market

Over the past decade, the US has been complaining about the amount of power which the BRIC group, and specifically China, has on the global economy. BRIC stands for Brazil, Russia, India and China; these were the world’s fastest growing economies. Only in the past 10 months, the US has turned their attention toward OPEC due to the prices of fuel. Nevertheless, China seems to have a strong influence even over the price of crude oil.