August 9, 2024 (NO COMMENTS)

FCMs claim no client defaults, but episode revives complaints of procyclical margining

 

Clearing brokers had one of their busiest days in years on Monday (August 5) as sharp falls in global markets triggered a massive increase in margin calls. The head of prime brokerage at a large European bank calls it a “more than three-times normal sort of day,” with total margin calls across bilateral and cleared derivatives tripling. Clearing executives at four other large banks tell a similar story of massive volumes, widespread margin breaches and repeated calls for additional collateral from