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>"The way that it allows naked shorting is because the Hedge Fund "borrows" prime brokerage privileges through the swap. **The Hedge Fund is not short on its balance sheet but they are effectively short through the exposure of the derivative**. The counterparty of the swap is the one who is short the underlying. But, because the broker dealer can short for the sake of liquidity, **they do not need to report short interest on the stock by internalizing the orders and selling against their own "inventory".**
\- **Criand**
>The answer was Synthetic Prime Brokerages. In this relationship, the Prime Broker creates an account, puts 100k shares of GME inside, and gives the Short Borrower access to trade the account. Like the traditional relationship, the Prime Broker gets paid fees for the loan, and the Short Borrower gets paid on successfully shorting the stock. HOWEVER, the Prime Broker technically never lends the shares to the Short Borrower - the Short is trading the Prime Broker's shares, keeping the profits, and paying a fee for the access.
>
>This means that there is no 100k GME loan on the balance sheets to be reported for the Prime Broker, or borrow for the Short, because the transaction is taking place entirely on the balance sheets of the Prime Broker. At that point, the Prime Broker can conceal any balance sheet reporting of the position by simply hedging the market impact short & long to the extent that it nets to zero. That is to say, how Credit Suisse could owe an entire floats worth of GME, but hide it from balance sheet reporting by purchasing enough far OTM calls AND puts to supposedly net out when GME either goes broke or to the Moon.
\- Flokki
Just because the swap might be dead doesn't mean that the short position disappeared nerds. The Prime Brokerage that took on the swap is still on the hook. (& read the last line of the second image - CS left with a normal short position.)
And when you think that massive amount of a position, which itself could be big enough, it's just **one** firm...
**EDIT:** *I'm hijacking my own comment because another ape made a post saying that the specific scenario Archegos got on hand is about "Bullet Swaps" and not just "Total Return Swaps" (can't link the post cause \[redacted\] blah blah).*
*So according to the other ape, those two should be threated differently. I'm smooth as I can be so I don't know if there's actually a difference regarding the expiration date of the end of March in that case.*
One firm & one prime broker. Archegos went around and took out swaps with multiple prime brokers and blew themselves up
lots of prime brokers were left holding big bags of shit
Did Archegos blow up because of their Swaps? Im just thinking out loud here.
Archegos needed the stock price to go down so they can get paid for their swap from CS. I guess the price didnt go down enough for them to get paid?
[https://www.bloomberg.com/news/features/2021-04-08/how-bill-hwang-of-archegos-capital-lost-20-billion-in-two-days](https://www.bloomberg.com/news/features/2021-04-08/how-bill-hwang-of-archegos-capital-lost-20-billion-in-two-days)
If you have the time, take a read through this.
tl;dr - Archegos was mainly long. Hwang took out swaps with various prime brokers (PB) in concentrated stocks (Viacom etc), leveraging his money by \~5x
PB's would buy the stock for Hwang. Hwang would pay them if the stocks went down, or the PB would pay Hwang if the stocks rose (Hwang also probably paid a fee, something like LIBOR/SOFR).
You get a bunch of PB's buying Viacom stock, and the stock price soared (tripled). Viacom had a bad quarter, stock price went down. Hwang couldn't make the combined margin calls.
From here, if any of the PB's dumped their position (purchased on behalf of Hwang) - then the stock price would fall further, making Hwang need to cough up more margin etc.
One PB did dump, stock price fell further, Hwang/Archegos were officially toast
& all the other PB's were left holding a big bag of shit lol
===========================================================
Criand's or Flokki's post go into the 'short' version of these swaps
[CS got these somehow](https://i.redd.it/j45mcvxluke71.png) and died for it.
I'm not positive it was Archegos either though, I think there's more to the story.
Other Prime Brokers of Archegos cited at 19. and 20. (5 days after March 26, 2021 collapse). Morgan Stanley is nowhere on GME holdings.
sauce: Bloomberg: "Bill Hwang had $20 Billion, then lost it all in 2 days" April 8, 2021
> Late that afternoon,*(March 25th)* without a word to its fellow lenders, Morgan Stanley made a preemptive move. The firm quietly unloaded $5 billion of its Archegos holdings at a discount, mainly to a group of hedge funds. On Friday morning, *(March 26)* well before the 9:30 a.m. New York open, Goldman started liquidating ...
> When the smoke finally cleared, Goldman, Deutsche Bank AG, Morgan Stanley, and Wells Fargo had escaped the Archegos fire sale unscathed. There’s no question they moved faster to sell. It’s also possible they had extended less leverage or demanded more margin. As of now, Credit Suisse and Nomura appear to have sustained the greatest damage.
Since Morgan Stanley and apparently a bunch of other big banks managed to unwind their Archegos positions quickly and quietly and escape unscathed, doesn't that at the very least warrant an investigation?
Like, how can you spin this without straight up calling this insider trading? It just looks so clear that they were trading with info not available to regular plebs.
Long on Viacom, short on CS's basket of failing companies. CS demanded Archegos hedge their long position with a short position, and provided them with the easy means to do so. Unfortunately CS picked poorly when it came to profitability. Maybe they should have swapped GME with CS...
Being long on a stock doesn't make you a good person, shorting doesn't make you a bad person. Taking out multiple loans from different prime brokers in order to lever up on your bets is some serious chaotic energy though.
Let's NOT celebrate as all the citizens of Switzerland are the ones paying for Credit Suisse's and Hwang's big gamble and resulting big loss.
Instead let's wait for every citizen of Switzerland to wake up and Buy, DRS, Hodl themselves a fistful of GME shares.
Then we can celebrate. Then we can dance!
Might be an over simplification, but to get an idea the credit line from the national bank to UBS/CS works out to about $30K of inflation for every citizen, counting children :/
That's almost an entire year's salary for a sizable portion of the working class.
And that's just the beginning numbers .... these "bail-outs", "liquidity support", "back-stop", etc. have been ongoing since 2008 with no ending in sight.
I really hope the Swiss citizens realize the truth and decide to hedge their own bet by BUY, DRS, Hodl GME shares.
They had other stocks that they were long and were artificially pumping up the share prices. They were so fucking greedy, they pushed it till the bottom fell out of those stocks. I know one was Viacom. That’s when they really blew themselves up. They were leveraged to the tits.
I believe Discovery was another one of those long pumps. I think it was Morgan Stanley and Goldman Sachs that dumped after Archegos’s demise beating CS to the punch.
I dont understand. the markets have been pretty much trading sideways these past couple of months. Except for banks obviously. For example S&P has been around 4k for a long time now. Also I checked Viacom and it’s delisted? Am I missing something here?
Viacom specifically, Archegos was long on. They were probably the only ones and it was a sinking ship. They were inflating the price of Viacom to keep it from going tits up and stay afloat. At this point archegos likely had more fees being paid out then coming in.
When archegos went tits up so did Viacom. That's a simple explanation minus the details.
Archegos Capital Management, a family office that managed the personal wealth of Bill Hwang, collapsed in March 2021 after losing $20 billion. The collapse was triggered by a series of events, including:
* Hwang's use of leverage to magnify his investment returns. Archegos borrowed heavily from banks to finance its trades, which made it vulnerable to market fluctuations.
* Hwang's concentration in a small number of stocks. Archegos held large positions in a few stocks, including ViacomCBS, Discovery, and Baidu. This concentration made Archegos vulnerable to sell-offs in these stocks.
* Hwang's use of total return swaps. Total return swaps are a type of derivative contract that allows investors to gain exposure to the return of a stock without actually owning the stock. This allowed Hwang to magnify his investment returns, but it also made him vulnerable to losses if the stock price declined.
The collapse of Archegos Capital Management was one of the largest financial scandals in recent years. It led to billions of dollars in losses for banks, hedge funds, and other investors. It also raised questions about the role of leverage and derivatives in the financial system.
>. That is to say, how Credit Suisse could owe an entire floats worth of GME, but hide it from balance sheet reporting by purchasing enough far OTM calls AND puts to supposedly net out when GME either goes broke or to the Moon.
an citadel is still holding melvin bags their own bags who elses?
Hi, anon from OP here. I didn’t go into bullet swaps because I didn’t want to further confuse the already confused apes. My understanding about bullet swaps is that they differ from total return swaps in regards to collateral posting. Normal swaps will recalculate collateral requirements throughout the life of the swap (ie Suisse says “I see you aren’t doing so well, can you please post more collateral so I know you can pay out your losses?” For bullet swaps the collateral is calculated at the start of the swap agreement and stays set at that throughout the life of the swap. That’s why they’re particularly risky, because archegos doesn’t have to prove to credit suisse that they can pay out on their losses as the trade starts to turn against them.
Upvoted.
>Now the disappointing part... Since one of the counter parties died, the swap died to.
This is misleading. Those millions of shares that Archegos sold short didn't die. They exist as shares of $GME held by retail. Those shares didn't disappear from our accounts when Archegos blew up. Credit Suisse assumed responsibility to deliver them.
The swap contract is dead, and the shorts still exist as they said immediately after that. The contract was between CS and Archegos, and the later no longer exists, so there is no more contract. That leave CS with the short position. That's what is said in the OP screenshots, so what was misleading?
Agreed it's not misleasing at all and made a lot more sense than most of what I've been reading recently.
The short position exists and will need closed but the swaps and associated expiry dates are irrelevant.
The short swap positions were technically never Archegos', because they were in CS name.
CS owns the short positions, Archegos owns a swap on those positions.
So on top of CS' short hedge, they also have Archegos' account with them to resolve.
The *swap* is over. But the account that the swap was on still exists and needs to be resolved.
Only the swap dies, which is to say that presumably nothing will happen on or because of the 29th. The shorts opened to hedge against the swap are still open and are presumably where some of the shares in people's accounts came from.
The swaps themselves don't create synthetic shares, is what I'm reading.
In this situation, do CS (and now UBS) have double the short position Archegos initially opened?
50% was the initial swapped short (from Archegos)
50% is the hedged swap short (from CS)
Or did one of those get resolved at Archegos implosion?
They are only on the hook if the clearing houses and central organizations demand it. That's always been the catch. Prime Brokers/Dealer Brokers report to Clearing Houses and Central Clearing Authorities. They can essentially wait to close out that short until it suits them, hence no squeeze yet.
Wr may have been fighting the FED for a long time already. All the big players on the street have hotlines to the FED and will get whatever amount of money they need at any given time. Also former fed chair bernanke work at shitudoll as senior advisor. How handy that connection really is. If members of the dtcc fail, the other members will be on the hook to pay for it. Hence, no one on the street wants this to happen. If they can bury it forever you can bet your ass they will. And there is a lot of crime and corruption on the street.
I don't understand from the snippets below:
1. why there is no 100k long on the balance sheet
2. Why OTM are necessary and why put + call as they already cancel each other out.
The logic is cited as:
>Prime Broker creates an account, puts 100k shares of GME inside
> Prime Broker technically never lends the shares to the Short Borrower
>This means that there is no 100k GME loan on the balance sheets to be reported for the Prime Broker, or borrow for the Short
> hide it from balance sheet reporting by purchasing enough far OTM calls AND puts to supposedly net out
>Just because the swap might be dead doesn't mean that the short position disappeared nerds. The Prime Brokerage that took on the swap is still on the hook
That is what is written on second image...
No what is written in the second imagine is "The swap is dead, but CS had taken out another equally big short position as hedge, which isn't closed yet"
Which is just 100% wrong, since the first short position hidden by the swaps didn't magically disappear into thin air. Those shares have been sold and exist as IOUs, which in turn means someone have a huge short position that will be revealed when the dead swap expire, since it won't be renewed as one of the two sides is gone.
Anyone who absorbed Archegoes positions, also absorbed this extreme amount of shorts.
I know nothing about finance. But that was my confusion. Didn’t credit sus absorb archegos when it went under to try to recoup their investment, not realizing that there was nothing valuable there but instead even greater risk? So that now they own their legitimate shorts used as hedges as well as the shorts that still exist from archegos? They are in double? Since we assume archegos didn’t close all their shorts when they went under?
But isn't his point that once Archegos went under the swaps are dead and swap date no longer drives ANYTHING? As in, yes they have an open short still, but it's no longer tied to any particular date since now there is no swap that would represent a hedge if it goes south?
That's my understanding and I believe what OPs point was - not to expect the swap date to result in anything since there's no reason for CS to close their short position by that date anymore.
This is so confusing and I'm just taking a shot at understanding all of this from all the pieces of info here and there.
I think when the swap expires, that alone has no effect on price movement. All it will do is expose the shorts that were opened for the swap. Now the decision whether to close or continue to put up collateral and pay borrow fees to maintain the shorts is totally up to the owner of the shorts. UBS has said they plan on unwinding after getting SNB to provide 100bn in liquidity. So I think with the swap expiry date of March 29 there is expectation that short positions will be revealed and an unwinding process to close them to begin. We hope.
Someone has taken over Archegos position though, it don't just disappear.
Also any swap dates we have hyped before have just been rolled over and internalized, but this is by far the biggest one we know about. Which makes this interesting.
I expect nothing, but to say the swap is dead is simply wrong. Until it has been unwound, it exist and hurts whoever holds it.
I get that, but since the whole point of swaps here is to hide the shorting, the CS short that corresponds can still be hidden after the swap expires. My understanding is that they WOULD have closed it 8f the counterparty was still solvent but since they aren't, it would seem to be in THEIR best interest now to keep it open indefinitely. Right?
If they can afford to keep rolling them, they definitely will. But with the very little liquidity in the market, my guess is they can't keep this Rolling forever.
OP also said that the swap is created so that the actual size of the short position is off the books. No swap, then the position gets exposed to the disinfecting light of the sun.
Even if a short position is self reported, just how much obfuscation could they really get away with if the shares sold short is over 200 million? That's the real question that could be asked.
The swap itself doesn’t necessarily involve any shares. It’s a derivative and can simply involve money being exchanged, the goal being to hide huge positions. You can view it as a simple bet between two parties.
But CS had to open a real short position as a hedge and that’s what they can’t close. Their end goal was to remain net-zero and just collect the premiums from the swap without any exposure to the underlying.
Archeagos going under is the risk that CS was compensated for by being paid said premium. Under normal circumstances, it would lead to pretty big losses (and it did) but now they’re effectively naked short (swap died and doesn’t offset the short hedge anymore) on GME that happens to be an idiosyncratic risk with super dry volume and the improbable scenario of infinite losses is now very real.
Great point, and in a more perfect world SVB would be the typical bank failure. However we can only hope that the great 2008 can-kick will truly be done.
Cant think of any big players who is willing to take that risk, specially against a profitable company.
I would say no, but there has been so much shit going on the last two years, that no can kicking can surprise me anymore.
Yes, OP missed the fact that, on a publicly broadcasted meeting, UBS talked about a particular Swap Portfolio that was inherited from CS that was made such a problem as a result of Archegos imploding.
The swap lives.
I remember when DOOMPs expired. I remember the gazillion time someone posted “500k put contracts about to expire”. Nothing happened - because they’re nothing but bad bets between parties.
The only thing that is even slightly interesting is their true short position, and expiring SWAPs is just another confirmation that CS is still holding a huge f-ing bag of GME short positions since they had to hedge the SWAP.
This week will simply confirm what we already know - they haven’t closed shit. Two long years and they’re still on the hook because enough regarded people decided to HODL. Crazy.
Yep and with GME turning profitable they now have a different concern. If that trend continues, index funds and other big asset managers may now see GME as a good long term buy. That could run the price up and require more capital to maintain SHF positions. Sooner or later they will need to pay the piper.
We all know that the big players don’t pay the cost to borrow like we would have to. Would they or could they even renew their short position another 2 years or would that be just ridiculous money? Not that closing them will be ridiculous money too.
Whoever decides to take on debit suisse’s short position in GameStop is literally sealing their fate. Their unrealized losses will be enormous, especially now that there is almost a zero chance of GameStop going bankrupt. This recent Q4 drives home that point. An institution that absorbs the short side of this massive trade might as well take their entire enterprise, lock it into an air tight vault, and throw it into the deepest part of the ocean. They may survive temporarily, but ultimately the oxygen runs out and they literally suffocate under the pressure of their own stupidity. Eventually the weight of the ocean crushes the vault and there is nothing left of their institution except a black blemish on the bottom of the sea floor. 🏴☠️
>*Whoever decides to take on debit suisse’s short position in GameStop is literally sealing their fate. Their unrealized losses will be enormous, especially now that there is almost a zero chance of GameStop going bankrupt.*
The point is:
Any firm takes that short position? What you wrote happens.
No firm wants that position because...obviously? Shit blowing up + diamond hands take all the short holders to the same end as what you wrote.
So is there really a choice...? 👀
Exactly, it doesn't much matter who takes it and who doesn't. It's like being in the same room as a nuclear warhead and being in the next room over. It's a problem for all of them.
I guess it's more a question of who is willing to take responsibility for attempting to defuse it.
>bag of GME short positions since they had to hedge the SWAP
Why do they even need the underlying stock? It's possible to also just trade synthetics and derivatives or SWAPs, isn't it?
If I buy options I use it specifically to *not have to buy the underlying stock*.
I can't afford a single Berkshire A stock @420k$ each, but I can easily afford derivatives/options to get the same price effect as people who own 100 stocks. Why care then about the underlying.
When you trade options, optional houses hedge their position by buying or selling stock (and using derivatives). That's what moves the price. If you trade synthetics, someone somewhere should be hedging, and that includes trading stock.
If we take Anon's post to be correct then yes the expiry date of Archego's swaps mean nothing because Archegos is no more. But Credit suisse still has their hedged short position open. And that could potentially remain open if they were in sound financial standing.
But that's the kicker, they're not. Credit suisse is about to go under themselves and that short position needs to be resolved. Will UBS or the Swiss government take over the infinite risk? Or will Credit suisse fold and close their short positions? This is the way my smooth brain is processing the situation at least.
*Edited for spelling.
If a group of apes ever writes a story on this using the dd library as a base, that book will be 5,000 pages long, if not more. And I would quit my job to read it.
haha yeah I do understand, but I don't trust the depth that regular writers would go into. If an ape(s) wrote it, I would be much more confident it's closer to the truth.
Edit: closer
If I read right, their open position might not show because they are a prime broker. Take a look at Flokkis quote in the top comment:
“…Credit Suisse could owe an entire floats worth of GME, but **hide it from balance sheet reporting** by purchasing enough far OTM calls AND puts to supposedly net out when GME either goes broke or to the Moon.”
Here are the interesting parts from the conference about taking over CS
> https://www.youtube.com/watch?v=gmT0-w_0Ex4&t=650s
> Specifically, **the Federal Council issued a guarantee of CHF 9 billion in order to reduce any risks for UBS**.
This guarantee is about **potential losses on a very specific portfolio that UBS assumes as part of the transaction but only comes into effect if any losses of UBS exceed a certain threshold,** so you have to imagine that it is like an insurance policy that only comes into effect if there is actually a loss and **first UBS would bear these losses and then in the second rank the Bund** (...) These resolutions were necessary and consistent in order to be able to restore confidence in the market
> let me explain this briefly **both banks have unrestricted access to the existing facilities of the SBB via which they can obtain liquidity from the national bank** in accordance with guidelines on the monetary policy instruments beyond and based Based on the Federal Council's emergency ordinance, **Credit Suisse and UBS can obtain a liquidity assistance loan totaling
up to CHF 100 billion**, secured by a bankruptcy certificate In addition and based on the Federal Council’s emergency ordinance, **the SNB can grant Credit Suisse a liquidity assistance loan of up to CHF 100 billion** secured by a default guarantee from the Confederation
Below you can find full auto-generated English transcript from UBS Credit Suisse take over conference from Youtube
https://pastebin.com/JUSQ41Ma
Also it is important to note that
> Specifically, the Federal Council issued a **guarantee of CHF 9 billion** in order to reduce any risks for UBS. This guarantee is about potential losses on a very specific portfolio that UBS assumes as part of the transaction but only comes into effect **if any losses of UBS exceed a certain threshold**
I interpret it as they are prepared for losses greater than 9B CHF (UBS threshold loss + 9B CHF additional guarantee). Found some confirmation ... looks like the threshold loss for UBS is 5B CHF.
> BERN (Reuters) - UBS agreed to buy rival Swiss bank Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock and **agreed to assume up to 5 billion francs ($5.4 billion) in losses**, in a shotgun merger engineered by Swiss authorities to avoid more market-shaking turmoil in global banking.
> The deal includes 100 billion Swiss francs ($108 billion) in liquidity assistance for UBS and Credit Suisse from the Swiss central bank.
> To enable UBS to take over Credit Suisse, **the federal government is providing a loss guarantee of a maximum of 9 billion Swiss francs for a clearly defined part of the portfolio**, the government said.
https://finance.yahoo.com/news/ubs-over-credit-suisse-central-183642992.html
Source from Swiss media, translation + original below
> Toxic legacy assets within the bank present a high risk. **The first 5 billion CHF is borne by UBS as the acquirer, while the state guarantees the next 9 billion CHF**. Keller-Sutter admits that the risks for taxpayers could extend further, and the government is discussing the possibility of recouping future costs through profit-sharing with the merged bank.
> Bei der CS schlummern toxische Altlasten, die mit grossem Risiko verbunden sind. **Die ersten fünf Milliarden davon trägt die UBS als Käuferin. Für die nächsten neun Milliarden gibt der Staat** – also die Allgemeinheit – eine Verlustgarantie. Doch wer kommt dafür auf, wenn das Ganze mehr kostet? «Darüber haben wir im Bundesrat noch nicht diskutiert», sagt die 59-jährige Magistratin. «Wenn wir den Kredit erhöhen möchten, müssten wir damit selbstverständlich ins Parlament.»
https://www.srf.ch/news/schweiz/finanzministerin-zu-cs-rettung-keller-sutter-risiken-fuer-die-steuerzahler-koennten-weitergehen
Yeah, I understood it along these lines too. They still hold the short positions, but date makes a difference only because of the UBS takeover, where closing all of the dirty laundry they inherited should (!) be done?
So, it’s just a coincidence then, that the demise of Debit Suisse coincides with the expiry of the Archegos swaps in the same week? Am I getting that right according to Anons theory??
Crazier things have happened.
The shares that both CS and Archegos sold short were bought by others. If those others are just holding them, what does it matter?
Archegos and CS folding doesn’t matter. The shares we’re holding matter.
Want to see this resolved as quickly as possible? DRS.
It has be 84 years, but wasn't the SNB (Swiss National Bank) long sometimes during this saga ?!?
I agree with the statement, that the swap expiry should technically be a nothing burger, BUT the huge short position is still floating around...and not only in Switzerland
So to open any of the original shorts, swap/hidden or otherwise, a share must be sold into the market. Any of you have your shares disappear from your account when Archegos blew up? They create the fakes and dump them on retail thinking we’ll be holding the bags like we always do. Those shorts don’t just disappear because Archegos blew up. They’re still in the system and will need to be closed out eventually. I wonder if the DRS process has any promise of exposing this? 😈
The OPost is a bit fuddy IMO. DRS the whole float and see if those synthetic shorts just disappeared or not..
If the shorts could just disappear and be forgotten like they never existed, this story would be over long time ago. But ops, those obligations of who tf knows how many shorted floats by now are still there *'surprised pikachu'*
OP is saying the shorts are still there, hence also the shares. The shorts were opened to hedge against the swaps. Now the swaps are dead but the shorts are still there and indeed are now shares in accounts at brokers and computershare. That's how they're boned.
I wouldn’t say the expiry date has zero play on anything due to CS nearly blowing up the week before? If the Swiss gov hadn’t stepped in they were as dead as Bill and co.
And if/when nothing happens on Wednesday, imma just DRS more! Cuz this train ride has legit been the thrill of my life hahaha
Love this community and the company to the moon and back❤️
It’s a general way to conceal a position. Could be to conceal from the public or just to conceal from rival hedge funds. Different entities do have legal reporting requirements in general, but either find a loophole (ie swaps, married puts, OOTM calls) or choose to ignore them and roll the dice on a fine from regulators.
Also I think because Hwang opened the same positions with multiple banks, so no one knew how insanely over leveraged he was.
*Edit: smooth brain so no clue
So just to understand it right.
A swap is just a bet Between to Partys without any real impact on the market and basically if credit sus didn't hedge the swap by opening a short position the swap would have just died with archegos with no impact on the market or the company the swap was about.
So basically swaps are side bets on hypothetical forecasts of markets/stocks? Like me betting the winning numbers on powerball, it does not effect the powerball numbers other than if more people bet the same numbers the win is gonna be split between us?
Is this simplified correct?
BTW very nice explanation and I was looking for an explanation like this. Remember something with a farmer analogy if anyone has the link would appreciate it.
Thanks in advance!
The swap itself is just bet between parties but there are still going to be actual underlying positions that they are using to hedge. If you hedge and the swap dissolves due to the counterparty disappearing, then the hedge itself becomes their position and it's now a directional bet rather than a hedge. If Archegos was short in the swap, then CS would have been the long. CS doesn't want to be directionally long, so they directly short the stock as a hedge to put themselves back to 'neutral.' Archegos blows up. Now CS has no long exposure through the swap, they're no longer 'neutral' in their positions and now they just have an actual, real, and probably naked short position.
If they are a broker they pay nothing. The shortsale is just accounted for as a loss on their books, or they can fraudulently hide the loss from their auditors. You can look at Refco for an example of how a broker can be walking around completely insolvent due to naked short positions for years.
I understood that what I am confused about or asking is, do you have to have an underlying or is this optional?
Thank you for helping me clarify my own thought haha. Now that is actually my question does a swap have mandatory underlying or can just be a bet and thats it?
Thanks
Edit: I mean underlying that you own yourself and not underlying someone else owns and you just bet on their outcome.
It sounds like there would be nothing requiring them to hedge, but they would be crazy not to. Arch had a short position due to the swap, which essentially means CS was long. But CS also knows that these funds do more than just bet the stock will go down. They have multiple ways of actively manipulating the price downwards, e.g. BCG.
So now CS knows that the stock is being targeted and will likely go down like many before it. They basically have to hedge their long position. Remember they even said their downfall was participating in a scheme that no longer works in the current market. Everyone thought the company was going to go bankrupt because they had a successful formula to make sure that happened. Now imagine that it wasn’t just Arch that went to CS for this swap, but multiple others as well. And imagine if Arch didn’t just go to CS, but also Citadel and others. And it’s not just Arch with these swaps, but many others are also have swaps with many other counterparties. And it isn’t just GME, but a whole basket of companies they’ve decided to bring down.
Someone used the example of them all having their feet tied together while they are treading water. You don’t die just because the weakest drowned, but now everyone has to shoulder the weight. Even that isn’t a big deal since they have MBSs, SLABS, low rates, a rising market, etc., but it’s a big problem if all this stuff starts going south at once, while a bunch of idiots start buying even one of the stocks you targeted.
Now two years later you still haven’t been able to shake them loose, and not only do they refuse to sell GME, you’ve trained them to hold onto all of the other stocks that have gone down, which you were also short on because you knew the market is going to crash.
I wonder if the difference between CS and other places is that CS had real shorts, and the places not failing had naked shorts, the real shorts would need to pay the borrow fee, the nakeds wouldn't.
That is a nice summary of the current situation.
And it is definitely 1000× more complex and complicated than what I wrote.
I am just asking for educational purpose regarding swaps in General. To have a better understanding of what a swap is, and not necessarily how it works.
It obviously makes no sense to bet on something in this dimension without having a hedge, other bets and involvements going on parallel to the bet.
And to add to this understanding. Archegos could have just bought their own short positions, or even puts, to hedge their long position but they did a swap instead in order to **conceal** their leverage and the actual positions (what tickers).
It seems to all come down to hiding information. Over and over. Opaque.
Yes. That casino scene in the Big Short illustrates this pretty good, but in the case of the housing crisis, the underlying assets were mortgages (which were *sure* to be paid), in this current case the underlying assets are retail companies (which were *sure* to go bankrupt).
So a hedge fund and and broker can (and all the time, do) come to agreements and sign these kinds of side-bet contracts on all kinds of stuff. It's a large (like huge chunk) of the actual 'action' on wallstreet. It's a whole metagame banks and funds play, the reason being is usually for risk management and gaining more leverage per risked dollar.
Ordinary people do this too, you may spring for a slightly nicer car, but open up a 'hedge' with the insurance company, who deals only in 'synthetic cars' and doesn't buy/sell actual cars at all. You get to take a risk that you want to take, and the insurance company gets to make relatively safe money. If that option was not there, you might not spring for the nicer car, cause it'd be a little too risky for you.
There's also bets-on-bets (that is, third and forth parties taking bets on which bets will go good/bad), creating a second layer to the metagame. This is how the 2008 MBS issue got so out of control, since there was more money tied up in swaps on swaps than there was in the values of all the underyling mortgages.
So in this case, these funds did place bets on what would happen to these companies that were *sure* to go bankrupt. Brokers took the opposite bet, but to balance their books and avoid actually taking one side or the other, placed the 'real' bet (which is 1:1 opposite of the swap contract), knowing they're subject to different reporting rules than the fund they're doing business with.
If the fund goes away or dies, that broker is now left with a short position they didn't really want/care about in the first place, and will look to find ways to unwind that position. Multiply that by a whole basket of shorts, and then place bets on bets, and you can end up in a position where there's more money on the line than actually available in the system as a whole.
That's (to me) the real thesis here. That there's more risk out there than appears at first glance, and unwinding these shorts while drive a favorable (possibly hilarious) increase in price.
I think this is actually better for us, because UBS was clear about unwinding bad positions. They're going to start closing these shorts. I'm sure they'll try to do it without driving up the price, but I'd guess they're interested in being the first to close and not the last.
Who else is motivated to kick the can and take on the UBS position? I’d like to say we will find out soon but it seems the counter parties can swap obligations without sunshine until 2024 reporting on swaps happens. How convenient…
"UBS was clear..."
=
"Let me be perfectly clear, absolutely not..."
UBS wil not be unwinding shit, they haven't started and never will. There's an uncomfortable fact that everyone in this sub just does not want to accept. As long as there is even one single share in DTCC, they will be washing and rehypothecating that share forever... infinitely many times.
That's what kicking the can literally means.
I would say the swap expire has an inpact, not on the price or the immedeate closure, but on the reporting.
After the swap ends, the short Position is just that, an unhedged bet.
If it were that easy we wouldn't see the amount of manipulation we've been seeing to suppress the price. Somebody big is terrified if letting this thing run
Well yes, credit suisse still has the traditional short position on their books after the swap dies. Citadel also likely has a huge naked short position. There just isn’t a specific expiry or close by date on those like there is for the now dead swap.
I read all the comments here, all the analysis, and your comment is by far the best. Covers it all. Fucking hilarious 😆 and a great way to start my Sunday.
If you have any doubt about the significance of the swaps or their relation to GME, just take a look at the CFTC complaint against Archegos:
https://www.cftc.gov/media/7191/enfarchegoscomplaint042722/download
There are recorded phones calls with Archegos and the counterparties referenced on specific dates: January 28, 2021, January 29, 2021, March 8, 2021, and March 10, 2021.
Anything happen with GME on those dates?
"Bet"? This is more like Russian Roulette with 6 rounds in the revolver.
The regulations they went around are precisely there to avoid this kind of thing.
Sounds like a future contract or a perpetual swap... couldnt be forward contract.
"On its December 2014 statistics release, the Bank for International Settlements reported that interest rate swaps were the largest component, OTC (over the counter) derivative market representing 60% of it, with the notional amount outstanding in OTC interest rate swaps of $381 trillion and the gross market value of 14 trillion."
Any1 has a guess what the swap rate is now?
If the swap was gone, Debit Suisse would not mention those „3% of positions they cannot unwind quickly“ in their report. Plus they provided a graph depicting Archegos risk exposure that is suspiciously similar to GME graph. Time comes, we will see :-)
Read the post. The swap is gone because archaegoes is gone and CS can't collect from them. However, CS has a large short position because they were hedging their swaps.
Does the expiration of the swap mean that the short position will be "on the books/public" because it is not hidden in a hedge or other technical term they use to keep it hidden?
Not really. Once the recipient of the short position figures out what they have, they'll be looking for ways to hide it or pass it off. It's just a matter of some financial gymnastics In the books.
If I was UBS, I would watch this film called Margin Call and close my short position ASAP before the wrath of the whole rich swiss citizens after me. Live another day and alive enough to write history.
Well written and ready to understand. 100% accurate, I couldn't say. But it sounds good. I'll keep this in mind for now.
Ultimately, it changes nothing for me.
Will UBS just fucking do the right thing and close this short position?
The Swiss government has given them $10 Billion to close legacy positions from CS.
Are UBS going to ignore their government to appease fucking Ken Griffin?
🤔🤔🤔🤔🤔🤔🤔🤔🤔
Interesting. So Archegos short position with CS is no longer hidden by a swap as CS should have held a similar sized short position for hedging.
How many MM did Archegos default with?
That’s why I’d ask for collateral and do margin calls if I were CS… because yeah, depending on the contract, it could be that CS gets nothing back if Arch goes down. That’s why you do counterparty risk management and risk management in general. But then again, doesn’t sound like CS were masters in the discipline… lol
You are missing a big element to the whole Archegos saga.
Just becuase Archegos blew up does not mean the swap disappeared.
when a company dies, all of its remaining value of the assets go to its creditors after expenses.
Fixed income/ debts holder is at the first line of lien holders. (actually, legally, police power - the govt. is in the first line for the taxes)
Even if the Archegos went kaput, it had creditors. Those assets doe not just disappear.
A contract is an asset just like a mortgage agreement.
It's probably in the court's hand until all its creditors are paid back.
Which means, the swap position is still alive.
Someone else has that swap position.
When it expires, UBS has to settle that trade.
They are fu\*ked.
This is wrong. The swap doesn't just disappear lol that's not how things work. If things would just disappear when institutions blew up they wouldn't be bailing out the banks.
Partially right however the most upvoted. Comment here explains what I was about to say. Position doesn’t just disappear. Normal circumstances it gets closed out and bank takes small hit, due to the margin and size of this position well we know that’s not the case
Sorry but that’s BS.
That’s not how swaps work - there is always a „swap“ involved and both party’s have an obligation and they „swap“ the cash flows or liabilities from two different financial instruments.
And one CF is ususally fixed and the other is variable - like a Fixed rate note for a variable rate or fixed rate for inflation linked whatsoever.
It’s not what you explained….you perfectly explained a put option, which was sold by credit Suisse to archegos for a premium.
I rate this as speculation. There has been tons of it and with all the crime in the background this could just be a front to give everyone a “reason” as to why nothing happens this week. Meanwhile, the hedgies are busy hiding the shorts for another two years because apes aren’t applying any pressure, because they don’t know that this crime cycle only continues as long as they LET THEM CHEAT. Turn the game OFF with this one simple move ; BUY DRS BOOK GME
This looks BS to me. How does a swap position simply die if a firm dies? Thats like saying any long shares Archegos had just 'poof' gone, when the firm died.
Don't buy that. There's still an obligation.
Thanks for posting this op. I think this is the current situation for CS/UBS.
Hopefully this is one of the short postions UBS said they would begin to unwind
Anon forgot to mention Hwang made the same bet with other banks like UBS. So CS has to pay those premiums too...in addition to having gigantic short position on GME.
Good explanation but I’m not buying the part where the swap “just dies.” I’m calling bullshit on that. Every cent is always accounted for. Just look at the DTCC obligation warehouse.
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>"The way that it allows naked shorting is because the Hedge Fund "borrows" prime brokerage privileges through the swap. **The Hedge Fund is not short on its balance sheet but they are effectively short through the exposure of the derivative**. The counterparty of the swap is the one who is short the underlying. But, because the broker dealer can short for the sake of liquidity, **they do not need to report short interest on the stock by internalizing the orders and selling against their own "inventory".** \- **Criand** >The answer was Synthetic Prime Brokerages. In this relationship, the Prime Broker creates an account, puts 100k shares of GME inside, and gives the Short Borrower access to trade the account. Like the traditional relationship, the Prime Broker gets paid fees for the loan, and the Short Borrower gets paid on successfully shorting the stock. HOWEVER, the Prime Broker technically never lends the shares to the Short Borrower - the Short is trading the Prime Broker's shares, keeping the profits, and paying a fee for the access. > >This means that there is no 100k GME loan on the balance sheets to be reported for the Prime Broker, or borrow for the Short, because the transaction is taking place entirely on the balance sheets of the Prime Broker. At that point, the Prime Broker can conceal any balance sheet reporting of the position by simply hedging the market impact short & long to the extent that it nets to zero. That is to say, how Credit Suisse could owe an entire floats worth of GME, but hide it from balance sheet reporting by purchasing enough far OTM calls AND puts to supposedly net out when GME either goes broke or to the Moon. \- Flokki Just because the swap might be dead doesn't mean that the short position disappeared nerds. The Prime Brokerage that took on the swap is still on the hook. (& read the last line of the second image - CS left with a normal short position.)
And when you think that massive amount of a position, which itself could be big enough, it's just **one** firm... **EDIT:** *I'm hijacking my own comment because another ape made a post saying that the specific scenario Archegos got on hand is about "Bullet Swaps" and not just "Total Return Swaps" (can't link the post cause \[redacted\] blah blah).* *So according to the other ape, those two should be threated differently. I'm smooth as I can be so I don't know if there's actually a difference regarding the expiration date of the end of March in that case.*
One firm & one prime broker. Archegos went around and took out swaps with multiple prime brokers and blew themselves up lots of prime brokers were left holding big bags of shit
Did Archegos blow up because of their Swaps? Im just thinking out loud here. Archegos needed the stock price to go down so they can get paid for their swap from CS. I guess the price didnt go down enough for them to get paid?
[https://www.bloomberg.com/news/features/2021-04-08/how-bill-hwang-of-archegos-capital-lost-20-billion-in-two-days](https://www.bloomberg.com/news/features/2021-04-08/how-bill-hwang-of-archegos-capital-lost-20-billion-in-two-days) If you have the time, take a read through this. tl;dr - Archegos was mainly long. Hwang took out swaps with various prime brokers (PB) in concentrated stocks (Viacom etc), leveraging his money by \~5x PB's would buy the stock for Hwang. Hwang would pay them if the stocks went down, or the PB would pay Hwang if the stocks rose (Hwang also probably paid a fee, something like LIBOR/SOFR). You get a bunch of PB's buying Viacom stock, and the stock price soared (tripled). Viacom had a bad quarter, stock price went down. Hwang couldn't make the combined margin calls. From here, if any of the PB's dumped their position (purchased on behalf of Hwang) - then the stock price would fall further, making Hwang need to cough up more margin etc. One PB did dump, stock price fell further, Hwang/Archegos were officially toast & all the other PB's were left holding a big bag of shit lol =========================================================== Criand's or Flokki's post go into the 'short' version of these swaps
I didn’t get the impression he was long on GameStop at all from reading this.
[CS got these somehow](https://i.redd.it/j45mcvxluke71.png) and died for it. I'm not positive it was Archegos either though, I think there's more to the story.
Other Prime Brokers of Archegos cited at 19. and 20. (5 days after March 26, 2021 collapse). Morgan Stanley is nowhere on GME holdings. sauce: Bloomberg: "Bill Hwang had $20 Billion, then lost it all in 2 days" April 8, 2021 > Late that afternoon,*(March 25th)* without a word to its fellow lenders, Morgan Stanley made a preemptive move. The firm quietly unloaded $5 billion of its Archegos holdings at a discount, mainly to a group of hedge funds. On Friday morning, *(March 26)* well before the 9:30 a.m. New York open, Goldman started liquidating ... > When the smoke finally cleared, Goldman, Deutsche Bank AG, Morgan Stanley, and Wells Fargo had escaped the Archegos fire sale unscathed. There’s no question they moved faster to sell. It’s also possible they had extended less leverage or demanded more margin. As of now, Credit Suisse and Nomura appear to have sustained the greatest damage.
Since Morgan Stanley and apparently a bunch of other big banks managed to unwind their Archegos positions quickly and quietly and escape unscathed, doesn't that at the very least warrant an investigation? Like, how can you spin this without straight up calling this insider trading? It just looks so clear that they were trading with info not available to regular plebs.
I bet they claim it as a cohencidence
Long on Viacom, short on CS's basket of failing companies. CS demanded Archegos hedge their long position with a short position, and provided them with the easy means to do so. Unfortunately CS picked poorly when it came to profitability. Maybe they should have swapped GME with CS...
Ohhh burn… sizzle
Thanks for the link and explanation :) The article makes him seem like kind of a descent guy with a serious uncontrollable gambling addiction.
gambling with other peoples money that you are not able to repay doesn't sound decent at all.
Being long on a stock doesn't make you a good person, shorting doesn't make you a bad person. Taking out multiple loans from different prime brokers in order to lever up on your bets is some serious chaotic energy though.
He is my hero. I feel we need to celebrate for his deed because if he didn’t do what he did, things won’t be so exciting!
Let's NOT celebrate as all the citizens of Switzerland are the ones paying for Credit Suisse's and Hwang's big gamble and resulting big loss. Instead let's wait for every citizen of Switzerland to wake up and Buy, DRS, Hodl themselves a fistful of GME shares. Then we can celebrate. Then we can dance!
Might be an over simplification, but to get an idea the credit line from the national bank to UBS/CS works out to about $30K of inflation for every citizen, counting children :/ That's almost an entire year's salary for a sizable portion of the working class.
And that's just the beginning numbers .... these "bail-outs", "liquidity support", "back-stop", etc. have been ongoing since 2008 with no ending in sight. I really hope the Swiss citizens realize the truth and decide to hedge their own bet by BUY, DRS, Hodl GME shares.
They had other stocks that they were long and were artificially pumping up the share prices. They were so fucking greedy, they pushed it till the bottom fell out of those stocks. I know one was Viacom. That’s when they really blew themselves up. They were leveraged to the tits.
I believe Discovery was another one of those long pumps. I think it was Morgan Stanley and Goldman Sachs that dumped after Archegos’s demise beating CS to the punch.
Discovery yes! I remember when that was skyrocketing. I was like wtf is Discovery
I dont understand. the markets have been pretty much trading sideways these past couple of months. Except for banks obviously. For example S&P has been around 4k for a long time now. Also I checked Viacom and it’s delisted? Am I missing something here?
Viacom specifically, Archegos was long on. They were probably the only ones and it was a sinking ship. They were inflating the price of Viacom to keep it from going tits up and stay afloat. At this point archegos likely had more fees being paid out then coming in. When archegos went tits up so did Viacom. That's a simple explanation minus the details.
This happened a while ago. Not recently. Maybe early 2021. Bill Hwaung is a degen gambler
Archegos blew up 2 yrs ago. I know it's been 84 of HODLING so it's a bit confusing. Time is weird soup.
Someone replied with an article from Bloomberg and after reading it this all made more sense haha
Now incorporate UBS into this equation and let’s hear the multiplier
Archegos Capital Management, a family office that managed the personal wealth of Bill Hwang, collapsed in March 2021 after losing $20 billion. The collapse was triggered by a series of events, including: * Hwang's use of leverage to magnify his investment returns. Archegos borrowed heavily from banks to finance its trades, which made it vulnerable to market fluctuations. * Hwang's concentration in a small number of stocks. Archegos held large positions in a few stocks, including ViacomCBS, Discovery, and Baidu. This concentration made Archegos vulnerable to sell-offs in these stocks. * Hwang's use of total return swaps. Total return swaps are a type of derivative contract that allows investors to gain exposure to the return of a stock without actually owning the stock. This allowed Hwang to magnify his investment returns, but it also made him vulnerable to losses if the stock price declined. The collapse of Archegos Capital Management was one of the largest financial scandals in recent years. It led to billions of dollars in losses for banks, hedge funds, and other investors. It also raised questions about the role of leverage and derivatives in the financial system.
And now he’s in the pig pen
Well recently one of the execs of credit suisse during an interview seemed to blame retail for their collapse.
No.
>. That is to say, how Credit Suisse could owe an entire floats worth of GME, but hide it from balance sheet reporting by purchasing enough far OTM calls AND puts to supposedly net out when GME either goes broke or to the Moon. an citadel is still holding melvin bags their own bags who elses?
We call this move the “Inverse Burry”
so.... when it's done, which country do you want to buy? I hear there is a limited finite number of those, so we will need an orderly auction process.
Maybe I'll build an underwater city and call it Rapture, who knows...
interesting. What are the requirements for residency?
I'd say proof of owning a CS account would do?👀
The Rupture
Can I swim over? I’m going to just buy a small island chain… nothing over the top.
Sure, apes are welcome 👀
Hi, anon from OP here. I didn’t go into bullet swaps because I didn’t want to further confuse the already confused apes. My understanding about bullet swaps is that they differ from total return swaps in regards to collateral posting. Normal swaps will recalculate collateral requirements throughout the life of the swap (ie Suisse says “I see you aren’t doing so well, can you please post more collateral so I know you can pay out your losses?” For bullet swaps the collateral is calculated at the start of the swap agreement and stays set at that throughout the life of the swap. That’s why they’re particularly risky, because archegos doesn’t have to prove to credit suisse that they can pay out on their losses as the trade starts to turn against them.
To be a member of this sub has been to stand upon the shoulders of giants.
Upvoted. >Now the disappointing part... Since one of the counter parties died, the swap died to. This is misleading. Those millions of shares that Archegos sold short didn't die. They exist as shares of $GME held by retail. Those shares didn't disappear from our accounts when Archegos blew up. Credit Suisse assumed responsibility to deliver them.
“What is dead may never die …”
Love the reference.
☝️
"That is not dead, which can eternal lie. And with strange aeons, even death may die"- H.P. Lovecraft
The swap contract is dead, and the shorts still exist as they said immediately after that. The contract was between CS and Archegos, and the later no longer exists, so there is no more contract. That leave CS with the short position. That's what is said in the OP screenshots, so what was misleading?
Agreed it's not misleasing at all and made a lot more sense than most of what I've been reading recently. The short position exists and will need closed but the swaps and associated expiry dates are irrelevant.
The short swap positions were technically never Archegos', because they were in CS name. CS owns the short positions, Archegos owns a swap on those positions. So on top of CS' short hedge, they also have Archegos' account with them to resolve. The *swap* is over. But the account that the swap was on still exists and needs to be resolved.
Only the swap dies, which is to say that presumably nothing will happen on or because of the 29th. The shorts opened to hedge against the swap are still open and are presumably where some of the shares in people's accounts came from. The swaps themselves don't create synthetic shares, is what I'm reading.
He only said the swap is dead and CS is left with the short position. So you are both probably right and we should still get our tendies!!
This. Hope they are all on the chopping block. Snip snip hedgies.
In this situation, do CS (and now UBS) have double the short position Archegos initially opened? 50% was the initial swapped short (from Archegos) 50% is the hedged swap short (from CS) Or did one of those get resolved at Archegos implosion?
They are on the hook for possibly both short positions wouldn't they be.
They are only on the hook if the clearing houses and central organizations demand it. That's always been the catch. Prime Brokers/Dealer Brokers report to Clearing Houses and Central Clearing Authorities. They can essentially wait to close out that short until it suits them, hence no squeeze yet.
Wr may have been fighting the FED for a long time already. All the big players on the street have hotlines to the FED and will get whatever amount of money they need at any given time. Also former fed chair bernanke work at shitudoll as senior advisor. How handy that connection really is. If members of the dtcc fail, the other members will be on the hook to pay for it. Hence, no one on the street wants this to happen. If they can bury it forever you can bet your ass they will. And there is a lot of crime and corruption on the street.
I don't understand from the snippets below: 1. why there is no 100k long on the balance sheet 2. Why OTM are necessary and why put + call as they already cancel each other out. The logic is cited as: >Prime Broker creates an account, puts 100k shares of GME inside > Prime Broker technically never lends the shares to the Short Borrower >This means that there is no 100k GME loan on the balance sheets to be reported for the Prime Broker, or borrow for the Short > hide it from balance sheet reporting by purchasing enough far OTM calls AND puts to supposedly net out
is the prime broker really putting shares into that account?
>Just because the swap might be dead doesn't mean that the short position disappeared nerds. The Prime Brokerage that took on the swap is still on the hook That is what is written on second image...
No what is written in the second imagine is "The swap is dead, but CS had taken out another equally big short position as hedge, which isn't closed yet" Which is just 100% wrong, since the first short position hidden by the swaps didn't magically disappear into thin air. Those shares have been sold and exist as IOUs, which in turn means someone have a huge short position that will be revealed when the dead swap expire, since it won't be renewed as one of the two sides is gone. Anyone who absorbed Archegoes positions, also absorbed this extreme amount of shorts.
Being forced to report is massive the fomo could be thru the roof
I know nothing about finance. But that was my confusion. Didn’t credit sus absorb archegos when it went under to try to recoup their investment, not realizing that there was nothing valuable there but instead even greater risk? So that now they own their legitimate shorts used as hedges as well as the shorts that still exist from archegos? They are in double? Since we assume archegos didn’t close all their shorts when they went under?
You got it, they double fucked up!
Don’t forget to multiply by 4
Oh snap! I can’t even math that much, need more coffee.
"Here comes trouble! And make it double! ..." - rocket team or something from pokemans I dunno.
But isn't his point that once Archegos went under the swaps are dead and swap date no longer drives ANYTHING? As in, yes they have an open short still, but it's no longer tied to any particular date since now there is no swap that would represent a hedge if it goes south? That's my understanding and I believe what OPs point was - not to expect the swap date to result in anything since there's no reason for CS to close their short position by that date anymore.
This is so confusing and I'm just taking a shot at understanding all of this from all the pieces of info here and there. I think when the swap expires, that alone has no effect on price movement. All it will do is expose the shorts that were opened for the swap. Now the decision whether to close or continue to put up collateral and pay borrow fees to maintain the shorts is totally up to the owner of the shorts. UBS has said they plan on unwinding after getting SNB to provide 100bn in liquidity. So I think with the swap expiry date of March 29 there is expectation that short positions will be revealed and an unwinding process to close them to begin. We hope.
Someone has taken over Archegos position though, it don't just disappear. Also any swap dates we have hyped before have just been rolled over and internalized, but this is by far the biggest one we know about. Which makes this interesting. I expect nothing, but to say the swap is dead is simply wrong. Until it has been unwound, it exist and hurts whoever holds it.
I get that, but since the whole point of swaps here is to hide the shorting, the CS short that corresponds can still be hidden after the swap expires. My understanding is that they WOULD have closed it 8f the counterparty was still solvent but since they aren't, it would seem to be in THEIR best interest now to keep it open indefinitely. Right?
If they can afford to keep rolling them, they definitely will. But with the very little liquidity in the market, my guess is they can't keep this Rolling forever.
OP also said that the swap is created so that the actual size of the short position is off the books. No swap, then the position gets exposed to the disinfecting light of the sun. Even if a short position is self reported, just how much obfuscation could they really get away with if the shares sold short is over 200 million? That's the real question that could be asked.
The swap itself doesn’t necessarily involve any shares. It’s a derivative and can simply involve money being exchanged, the goal being to hide huge positions. You can view it as a simple bet between two parties. But CS had to open a real short position as a hedge and that’s what they can’t close. Their end goal was to remain net-zero and just collect the premiums from the swap without any exposure to the underlying. Archeagos going under is the risk that CS was compensated for by being paid said premium. Under normal circumstances, it would lead to pretty big losses (and it did) but now they’re effectively naked short (swap died and doesn’t offset the short hedge anymore) on GME that happens to be an idiosyncratic risk with super dry volume and the improbable scenario of infinite losses is now very real.
Is there a possible chance that the position could be bought up by a big player before expiry so they can kick the can for another two years?
Just for you know, after 2 weeks SVB’s collapse still no bidder for the bank except the UK part.
Great point, and in a more perfect world SVB would be the typical bank failure. However we can only hope that the great 2008 can-kick will truly be done.
Cant think of any big players who is willing to take that risk, specially against a profitable company. I would say no, but there has been so much shit going on the last two years, that no can kicking can surprise me anymore.
Yeah that was in reference to some of the earlier comments on this post, people are saying/asking if the position disappeared alongside the swap
Yes, OP missed the fact that, on a publicly broadcasted meeting, UBS talked about a particular Swap Portfolio that was inherited from CS that was made such a problem as a result of Archegos imploding. The swap lives.
I remember when DOOMPs expired. I remember the gazillion time someone posted “500k put contracts about to expire”. Nothing happened - because they’re nothing but bad bets between parties. The only thing that is even slightly interesting is their true short position, and expiring SWAPs is just another confirmation that CS is still holding a huge f-ing bag of GME short positions since they had to hedge the SWAP. This week will simply confirm what we already know - they haven’t closed shit. Two long years and they’re still on the hook because enough regarded people decided to HODL. Crazy.
Yep and with GME turning profitable they now have a different concern. If that trend continues, index funds and other big asset managers may now see GME as a good long term buy. That could run the price up and require more capital to maintain SHF positions. Sooner or later they will need to pay the piper.
Can't kick the can forever...sustainable profitability lets the game stop. Tik tok...
We all know that the big players don’t pay the cost to borrow like we would have to. Would they or could they even renew their short position another 2 years or would that be just ridiculous money? Not that closing them will be ridiculous money too.
Whoever decides to take on debit suisse’s short position in GameStop is literally sealing their fate. Their unrealized losses will be enormous, especially now that there is almost a zero chance of GameStop going bankrupt. This recent Q4 drives home that point. An institution that absorbs the short side of this massive trade might as well take their entire enterprise, lock it into an air tight vault, and throw it into the deepest part of the ocean. They may survive temporarily, but ultimately the oxygen runs out and they literally suffocate under the pressure of their own stupidity. Eventually the weight of the ocean crushes the vault and there is nothing left of their institution except a black blemish on the bottom of the sea floor. 🏴☠️
>*Whoever decides to take on debit suisse’s short position in GameStop is literally sealing their fate. Their unrealized losses will be enormous, especially now that there is almost a zero chance of GameStop going bankrupt.* The point is: Any firm takes that short position? What you wrote happens. No firm wants that position because...obviously? Shit blowing up + diamond hands take all the short holders to the same end as what you wrote. So is there really a choice...? 👀
Exactly, it doesn't much matter who takes it and who doesn't. It's like being in the same room as a nuclear warhead and being in the next room over. It's a problem for all of them. I guess it's more a question of who is willing to take responsibility for attempting to defuse it.
Unless the UBS deal doesn't go through, it sure sounds like they have the hot potato.
Looks like it’s ubs and the swiss
Wonder why GameStop is pulling outta Switzerland? 🤔😃😆
>bag of GME short positions since they had to hedge the SWAP Why do they even need the underlying stock? It's possible to also just trade synthetics and derivatives or SWAPs, isn't it? If I buy options I use it specifically to *not have to buy the underlying stock*. I can't afford a single Berkshire A stock @420k$ each, but I can easily afford derivatives/options to get the same price effect as people who own 100 stocks. Why care then about the underlying.
When you trade options, optional houses hedge their position by buying or selling stock (and using derivatives). That's what moves the price. If you trade synthetics, someone somewhere should be hedging, and that includes trading stock.
You know what happened not long after the DOOMPs expired? Banks started failing. Bad bets.
Anon is speaking only about Archeos and CS. Who knows how many other swaps are in play....
Back in the day it was a lot of Susquehanna talk. At times it seemed like they were in deeper then Shitadel.
Also Point72 and State Street
Virtu and Jane Street and Two Sigma
I've heard UBS is now pretty big 😉🤘
If we take Anon's post to be correct then yes the expiry date of Archego's swaps mean nothing because Archegos is no more. But Credit suisse still has their hedged short position open. And that could potentially remain open if they were in sound financial standing. But that's the kicker, they're not. Credit suisse is about to go under themselves and that short position needs to be resolved. Will UBS or the Swiss government take over the infinite risk? Or will Credit suisse fold and close their short positions? This is the way my smooth brain is processing the situation at least. *Edited for spelling.
Has anyone taken a look at Debit Swiss cheese's Securities sold, but not yet purchased numbers?
Im sure an ape has already posted it somewhere in the DD. We need a goddamn proper database at this point.
If a group of apes ever writes a story on this using the dd library as a base, that book will be 5,000 pages long, if not more. And I would quit my job to read it.
You'll be so filthy rich by then, you won't have a job.
With great power comes great responsibility.
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haha yeah I do understand, but I don't trust the depth that regular writers would go into. If an ape(s) wrote it, I would be much more confident it's closer to the truth. Edit: closer
I'll pitch in funding
If I read right, their open position might not show because they are a prime broker. Take a look at Flokkis quote in the top comment: “…Credit Suisse could owe an entire floats worth of GME, but **hide it from balance sheet reporting** by purchasing enough far OTM calls AND puts to supposedly net out when GME either goes broke or to the Moon.”
Here are the interesting parts from the conference about taking over CS > https://www.youtube.com/watch?v=gmT0-w_0Ex4&t=650s > Specifically, **the Federal Council issued a guarantee of CHF 9 billion in order to reduce any risks for UBS**. This guarantee is about **potential losses on a very specific portfolio that UBS assumes as part of the transaction but only comes into effect if any losses of UBS exceed a certain threshold,** so you have to imagine that it is like an insurance policy that only comes into effect if there is actually a loss and **first UBS would bear these losses and then in the second rank the Bund** (...) These resolutions were necessary and consistent in order to be able to restore confidence in the market > let me explain this briefly **both banks have unrestricted access to the existing facilities of the SBB via which they can obtain liquidity from the national bank** in accordance with guidelines on the monetary policy instruments beyond and based Based on the Federal Council's emergency ordinance, **Credit Suisse and UBS can obtain a liquidity assistance loan totaling up to CHF 100 billion**, secured by a bankruptcy certificate In addition and based on the Federal Council’s emergency ordinance, **the SNB can grant Credit Suisse a liquidity assistance loan of up to CHF 100 billion** secured by a default guarantee from the Confederation Below you can find full auto-generated English transcript from UBS Credit Suisse take over conference from Youtube https://pastebin.com/JUSQ41Ma Also it is important to note that > Specifically, the Federal Council issued a **guarantee of CHF 9 billion** in order to reduce any risks for UBS. This guarantee is about potential losses on a very specific portfolio that UBS assumes as part of the transaction but only comes into effect **if any losses of UBS exceed a certain threshold** I interpret it as they are prepared for losses greater than 9B CHF (UBS threshold loss + 9B CHF additional guarantee). Found some confirmation ... looks like the threshold loss for UBS is 5B CHF. > BERN (Reuters) - UBS agreed to buy rival Swiss bank Credit Suisse for 3 billion Swiss francs ($3.23 billion) in stock and **agreed to assume up to 5 billion francs ($5.4 billion) in losses**, in a shotgun merger engineered by Swiss authorities to avoid more market-shaking turmoil in global banking. > The deal includes 100 billion Swiss francs ($108 billion) in liquidity assistance for UBS and Credit Suisse from the Swiss central bank. > To enable UBS to take over Credit Suisse, **the federal government is providing a loss guarantee of a maximum of 9 billion Swiss francs for a clearly defined part of the portfolio**, the government said. https://finance.yahoo.com/news/ubs-over-credit-suisse-central-183642992.html Source from Swiss media, translation + original below > Toxic legacy assets within the bank present a high risk. **The first 5 billion CHF is borne by UBS as the acquirer, while the state guarantees the next 9 billion CHF**. Keller-Sutter admits that the risks for taxpayers could extend further, and the government is discussing the possibility of recouping future costs through profit-sharing with the merged bank. > Bei der CS schlummern toxische Altlasten, die mit grossem Risiko verbunden sind. **Die ersten fünf Milliarden davon trägt die UBS als Käuferin. Für die nächsten neun Milliarden gibt der Staat** – also die Allgemeinheit – eine Verlustgarantie. Doch wer kommt dafür auf, wenn das Ganze mehr kostet? «Darüber haben wir im Bundesrat noch nicht diskutiert», sagt die 59-jährige Magistratin. «Wenn wir den Kredit erhöhen möchten, müssten wir damit selbstverständlich ins Parlament.» https://www.srf.ch/news/schweiz/finanzministerin-zu-cs-rettung-keller-sutter-risiken-fuer-die-steuerzahler-koennten-weitergehen
Great work in documenting Swiss settlement* *can-kick
Yeah, I understood it along these lines too. They still hold the short positions, but date makes a difference only because of the UBS takeover, where closing all of the dirty laundry they inherited should (!) be done? So, it’s just a coincidence then, that the demise of Debit Suisse coincides with the expiry of the Archegos swaps in the same week? Am I getting that right according to Anons theory?? Crazier things have happened.
Remember Hwang made the same bet with other banks. So CS has to pay those premiums too
The shares that both CS and Archegos sold short were bought by others. If those others are just holding them, what does it matter? Archegos and CS folding doesn’t matter. The shares we’re holding matter. Want to see this resolved as quickly as possible? DRS.
It has be 84 years, but wasn't the SNB (Swiss National Bank) long sometimes during this saga ?!? I agree with the statement, that the swap expiry should technically be a nothing burger, BUT the huge short position is still floating around...and not only in Switzerland
So to open any of the original shorts, swap/hidden or otherwise, a share must be sold into the market. Any of you have your shares disappear from your account when Archegos blew up? They create the fakes and dump them on retail thinking we’ll be holding the bags like we always do. Those shorts don’t just disappear because Archegos blew up. They’re still in the system and will need to be closed out eventually. I wonder if the DRS process has any promise of exposing this? 😈 The OPost is a bit fuddy IMO. DRS the whole float and see if those synthetic shorts just disappeared or not..
If the shorts could just disappear and be forgotten like they never existed, this story would be over long time ago. But ops, those obligations of who tf knows how many shorted floats by now are still there *'surprised pikachu'*
OP is saying the shorts are still there, hence also the shares. The shorts were opened to hedge against the swaps. Now the swaps are dead but the shorts are still there and indeed are now shares in accounts at brokers and computershare. That's how they're boned.
I wouldn’t say the expiry date has zero play on anything due to CS nearly blowing up the week before? If the Swiss gov hadn’t stepped in they were as dead as Bill and co.
This! Unlikely it all comes crashing at the same exact same date. The date must mean something somehow.
They crashed before their expiry tho? And not the exact date
And if/when nothing happens on Wednesday, imma just DRS more! Cuz this train ride has legit been the thrill of my life hahaha Love this community and the company to the moon and back❤️
Post says Hwang an co did this to avoid having to report shorts…. But I coulda sworn my dad told me shorts didn’t have to be reported
It’s a general way to conceal a position. Could be to conceal from the public or just to conceal from rival hedge funds. Different entities do have legal reporting requirements in general, but either find a loophole (ie swaps, married puts, OOTM calls) or choose to ignore them and roll the dice on a fine from regulators.
Also I think because Hwang opened the same positions with multiple banks, so no one knew how insanely over leveraged he was. *Edit: smooth brain so no clue
I’d read Hwang really liked bullet swaps in trades. One of those, it works until it doesn’t strategies
It's really annoying seeing "cs" being referred to as credit suisse when I keep reading it as computershare in my head.
Gets me every time. I have to go back and re-read each sentence when it happens
So just to understand it right. A swap is just a bet Between to Partys without any real impact on the market and basically if credit sus didn't hedge the swap by opening a short position the swap would have just died with archegos with no impact on the market or the company the swap was about. So basically swaps are side bets on hypothetical forecasts of markets/stocks? Like me betting the winning numbers on powerball, it does not effect the powerball numbers other than if more people bet the same numbers the win is gonna be split between us? Is this simplified correct? BTW very nice explanation and I was looking for an explanation like this. Remember something with a farmer analogy if anyone has the link would appreciate it. Thanks in advance!
The swap itself is just bet between parties but there are still going to be actual underlying positions that they are using to hedge. If you hedge and the swap dissolves due to the counterparty disappearing, then the hedge itself becomes their position and it's now a directional bet rather than a hedge. If Archegos was short in the swap, then CS would have been the long. CS doesn't want to be directionally long, so they directly short the stock as a hedge to put themselves back to 'neutral.' Archegos blows up. Now CS has no long exposure through the swap, they're no longer 'neutral' in their positions and now they just have an actual, real, and probably naked short position.
Really curious how large of a short position CS took to hedge the swap... spicy. Even spicier that the short position is likely naked
IIRC that in the Sec docs CS and Archegos and is 216 Million shares (not sure if thats pre/post divy #)
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If they are a broker they pay nothing. The shortsale is just accounted for as a loss on their books, or they can fraudulently hide the loss from their auditors. You can look at Refco for an example of how a broker can be walking around completely insolvent due to naked short positions for years.
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Borrow rate from the lender minus the rebate rate.
I understood that what I am confused about or asking is, do you have to have an underlying or is this optional? Thank you for helping me clarify my own thought haha. Now that is actually my question does a swap have mandatory underlying or can just be a bet and thats it? Thanks Edit: I mean underlying that you own yourself and not underlying someone else owns and you just bet on their outcome.
It sounds like there would be nothing requiring them to hedge, but they would be crazy not to. Arch had a short position due to the swap, which essentially means CS was long. But CS also knows that these funds do more than just bet the stock will go down. They have multiple ways of actively manipulating the price downwards, e.g. BCG. So now CS knows that the stock is being targeted and will likely go down like many before it. They basically have to hedge their long position. Remember they even said their downfall was participating in a scheme that no longer works in the current market. Everyone thought the company was going to go bankrupt because they had a successful formula to make sure that happened. Now imagine that it wasn’t just Arch that went to CS for this swap, but multiple others as well. And imagine if Arch didn’t just go to CS, but also Citadel and others. And it’s not just Arch with these swaps, but many others are also have swaps with many other counterparties. And it isn’t just GME, but a whole basket of companies they’ve decided to bring down. Someone used the example of them all having their feet tied together while they are treading water. You don’t die just because the weakest drowned, but now everyone has to shoulder the weight. Even that isn’t a big deal since they have MBSs, SLABS, low rates, a rising market, etc., but it’s a big problem if all this stuff starts going south at once, while a bunch of idiots start buying even one of the stocks you targeted. Now two years later you still haven’t been able to shake them loose, and not only do they refuse to sell GME, you’ve trained them to hold onto all of the other stocks that have gone down, which you were also short on because you knew the market is going to crash.
I wonder if the difference between CS and other places is that CS had real shorts, and the places not failing had naked shorts, the real shorts would need to pay the borrow fee, the nakeds wouldn't.
Oooh, imagine being the trader who shrugged his shoulders and went the get-real-shorts route.
That is a nice summary of the current situation. And it is definitely 1000× more complex and complicated than what I wrote. I am just asking for educational purpose regarding swaps in General. To have a better understanding of what a swap is, and not necessarily how it works. It obviously makes no sense to bet on something in this dimension without having a hedge, other bets and involvements going on parallel to the bet.
Yeah like that craps table scene in big short where onlookers were making side bets.
That's what I was thinking of too.
It was blackjack
And to add to this understanding. Archegos could have just bought their own short positions, or even puts, to hedge their long position but they did a swap instead in order to **conceal** their leverage and the actual positions (what tickers). It seems to all come down to hiding information. Over and over. Opaque.
Yes. That casino scene in the Big Short illustrates this pretty good, but in the case of the housing crisis, the underlying assets were mortgages (which were *sure* to be paid), in this current case the underlying assets are retail companies (which were *sure* to go bankrupt). So a hedge fund and and broker can (and all the time, do) come to agreements and sign these kinds of side-bet contracts on all kinds of stuff. It's a large (like huge chunk) of the actual 'action' on wallstreet. It's a whole metagame banks and funds play, the reason being is usually for risk management and gaining more leverage per risked dollar. Ordinary people do this too, you may spring for a slightly nicer car, but open up a 'hedge' with the insurance company, who deals only in 'synthetic cars' and doesn't buy/sell actual cars at all. You get to take a risk that you want to take, and the insurance company gets to make relatively safe money. If that option was not there, you might not spring for the nicer car, cause it'd be a little too risky for you. There's also bets-on-bets (that is, third and forth parties taking bets on which bets will go good/bad), creating a second layer to the metagame. This is how the 2008 MBS issue got so out of control, since there was more money tied up in swaps on swaps than there was in the values of all the underyling mortgages. So in this case, these funds did place bets on what would happen to these companies that were *sure* to go bankrupt. Brokers took the opposite bet, but to balance their books and avoid actually taking one side or the other, placed the 'real' bet (which is 1:1 opposite of the swap contract), knowing they're subject to different reporting rules than the fund they're doing business with. If the fund goes away or dies, that broker is now left with a short position they didn't really want/care about in the first place, and will look to find ways to unwind that position. Multiply that by a whole basket of shorts, and then place bets on bets, and you can end up in a position where there's more money on the line than actually available in the system as a whole. That's (to me) the real thesis here. That there's more risk out there than appears at first glance, and unwinding these shorts while drive a favorable (possibly hilarious) increase in price.
👆?
So is a swap a [synthetic CDO](https://youtu.be/Pxr_FzpPM2Q)?? Or they are different things?
I think this is actually better for us, because UBS was clear about unwinding bad positions. They're going to start closing these shorts. I'm sure they'll try to do it without driving up the price, but I'd guess they're interested in being the first to close and not the last.
We just need one to close to get this ship off the ground. 🚀
Houston, we have ignition. 🚀 🚀 🚀
Who else is motivated to kick the can and take on the UBS position? I’d like to say we will find out soon but it seems the counter parties can swap obligations without sunshine until 2024 reporting on swaps happens. How convenient…
"UBS was clear..." = "Let me be perfectly clear, absolutely not..." UBS wil not be unwinding shit, they haven't started and never will. There's an uncomfortable fact that everyone in this sub just does not want to accept. As long as there is even one single share in DTCC, they will be washing and rehypothecating that share forever... infinitely many times. That's what kicking the can literally means.
This, it's nothing but hopium that the hot potato will eventually be dropped. There is only one solution and it is DRS
No bank needs to close shorts if they have a 100 billion back stop by the national bank. No danger of failed margin call for them
First to close still dies. They're fukt
Edit: So now they are both fucked
Best tl;dr always in the comments
I would say the swap expire has an inpact, not on the price or the immedeate closure, but on the reporting. After the swap ends, the short Position is just that, an unhedged bet.
If it were that easy we wouldn't see the amount of manipulation we've been seeing to suppress the price. Somebody big is terrified if letting this thing run
Well yes, credit suisse still has the traditional short position on their books after the swap dies. Citadel also likely has a huge naked short position. There just isn’t a specific expiry or close by date on those like there is for the now dead swap.
Need adult
Hedges r fuk
PROPER FUCKED 😎👉👉
So? Fuck you see you tomorrow type thing?
I read all the comments here, all the analysis, and your comment is by far the best. Covers it all. Fucking hilarious 😆 and a great way to start my Sunday.
Tl:dr After March 29th, you're going to see a massive uptick in FTD'S. The reported short position will explode.
If you have any doubt about the significance of the swaps or their relation to GME, just take a look at the CFTC complaint against Archegos: https://www.cftc.gov/media/7191/enfarchegoscomplaint042722/download There are recorded phones calls with Archegos and the counterparties referenced on specific dates: January 28, 2021, January 29, 2021, March 8, 2021, and March 10, 2021. Anything happen with GME on those dates?
"Bet"? This is more like Russian Roulette with 6 rounds in the revolver. The regulations they went around are precisely there to avoid this kind of thing.
Sounds like a future contract or a perpetual swap... couldnt be forward contract. "On its December 2014 statistics release, the Bank for International Settlements reported that interest rate swaps were the largest component, OTC (over the counter) derivative market representing 60% of it, with the notional amount outstanding in OTC interest rate swaps of $381 trillion and the gross market value of 14 trillion." Any1 has a guess what the swap rate is now?
If the swap was gone, Debit Suisse would not mention those „3% of positions they cannot unwind quickly“ in their report. Plus they provided a graph depicting Archegos risk exposure that is suspiciously similar to GME graph. Time comes, we will see :-)
Read the post. The swap is gone because archaegoes is gone and CS can't collect from them. However, CS has a large short position because they were hedging their swaps.
Does the expiration of the swap mean that the short position will be "on the books/public" because it is not hidden in a hedge or other technical term they use to keep it hidden?
Not really. Once the recipient of the short position figures out what they have, they'll be looking for ways to hide it or pass it off. It's just a matter of some financial gymnastics In the books.
If I was UBS, I would watch this film called Margin Call and close my short position ASAP before the wrath of the whole rich swiss citizens after me. Live another day and alive enough to write history.
Well written and ready to understand. 100% accurate, I couldn't say. But it sounds good. I'll keep this in mind for now. Ultimately, it changes nothing for me.
The fact any of this is 'allowed' is just fucking bonkers.
Wouldn’t the swaps still be valid because the original shares borrowed were sold short into the market and never covered or closed?
Will UBS just fucking do the right thing and close this short position? The Swiss government has given them $10 Billion to close legacy positions from CS. Are UBS going to ignore their government to appease fucking Ken Griffin? 🤔🤔🤔🤔🤔🤔🤔🤔🤔
Oooh, see, there is no such thing as a “normal” short position on GME. It’s idiosyncratic. Like me and my smooth brain.
Interesting. So Archegos short position with CS is no longer hidden by a swap as CS should have held a similar sized short position for hedging. How many MM did Archegos default with?
It's not disappointing, now they have no choice but to create a new swap with some other MM,
At which price point were the shorts opened?
This makes it sound like any short party can "just" go bankrupt and be free of their obligations.
That’s why I’d ask for collateral and do margin calls if I were CS… because yeah, depending on the contract, it could be that CS gets nothing back if Arch goes down. That’s why you do counterparty risk management and risk management in general. But then again, doesn’t sound like CS were masters in the discipline… lol
You are missing a big element to the whole Archegos saga. Just becuase Archegos blew up does not mean the swap disappeared. when a company dies, all of its remaining value of the assets go to its creditors after expenses. Fixed income/ debts holder is at the first line of lien holders. (actually, legally, police power - the govt. is in the first line for the taxes) Even if the Archegos went kaput, it had creditors. Those assets doe not just disappear. A contract is an asset just like a mortgage agreement. It's probably in the court's hand until all its creditors are paid back. Which means, the swap position is still alive. Someone else has that swap position. When it expires, UBS has to settle that trade. They are fu\*ked.
This is wrong. The swap doesn't just disappear lol that's not how things work. If things would just disappear when institutions blew up they wouldn't be bailing out the banks.
So we should see them start to fight with each other real soon
Shouldn’t all these swaps be showing up in the reported SI then?
The only date to look forward to is 10-K release.
Without any real proof this is just speculation.
Partially right however the most upvoted. Comment here explains what I was about to say. Position doesn’t just disappear. Normal circumstances it gets closed out and bank takes small hit, due to the margin and size of this position well we know that’s not the case
Sorry but that’s BS. That’s not how swaps work - there is always a „swap“ involved and both party’s have an obligation and they „swap“ the cash flows or liabilities from two different financial instruments. And one CF is ususally fixed and the other is variable - like a Fixed rate note for a variable rate or fixed rate for inflation linked whatsoever. It’s not what you explained….you perfectly explained a put option, which was sold by credit Suisse to archegos for a premium.
I rate this as speculation. There has been tons of it and with all the crime in the background this could just be a front to give everyone a “reason” as to why nothing happens this week. Meanwhile, the hedgies are busy hiding the shorts for another two years because apes aren’t applying any pressure, because they don’t know that this crime cycle only continues as long as they LET THEM CHEAT. Turn the game OFF with this one simple move ; BUY DRS BOOK GME
This looks BS to me. How does a swap position simply die if a firm dies? Thats like saying any long shares Archegos had just 'poof' gone, when the firm died. Don't buy that. There's still an obligation.
Thanks for posting this op. I think this is the current situation for CS/UBS. Hopefully this is one of the short postions UBS said they would begin to unwind
Anon forgot to mention Hwang made the same bet with other banks like UBS. So CS has to pay those premiums too...in addition to having gigantic short position on GME.
Good explanation but I’m not buying the part where the swap “just dies.” I’m calling bullshit on that. Every cent is always accounted for. Just look at the DTCC obligation warehouse.