The finer details regarding the forced selling of stocks linked to Archegos Capital Management are becoming clearer. In what could be described as the largest margin call ever for a single client, more than $50bn worth of total return swaps (over-the-counter derivatives almost identical to better-known contracts for difference) entered into by Bill Hwang’s family office were unwound on March 26.

Large blocks of shares were dumped in the market by the derivative counterparties, the prime brokerage divisions of several global investment banks. It seems Archegos had a highly concentrated portfolio financed with leverage of more than 500% and that it failed to shore up its collateral when required to do so, triggering the sales. The large selling volume caused many of Archegos’s investments to fall sharply in price, triggering further forced selling and billions of dollars of losses for those investment banks which were too slow to unwind their exposure to Archegos...

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