Premarket shares: Why Archegos was allowed to function within the shadows

It’s also a wake-up call to regulators about hidden risks within the financial system.

“It is a dereliction of duty for regulators at the Securities and Exchange Commission, the Federal Reserve, the Treasury Department and elsewhere, including most prominently the members of the Financial Stability Oversight Council, to allow these systemic risks to continue to build up unseen and unregulated,” Dennis Kelleher, CEO of financial reform group Better Markets, said in a statement Monday.

What’s happening: Few people had heard of Archegos before this week. But the investment firm is in the spotlight after its bets on media companies using tons of borrowed money and complex derivatives backfired. That forced lenders on Wall Street to step in and demand that Archegos unwind its positions. Major banks, including Credit Suisse (CS) and Nomura (NMR), now face huge losses from their exposure.

Some market watchers expect fallout from the episode will be relatively contained.

“This is likely not…

The post Premarket shares: Why Archegos was allowed to function within the shadows appeared first on CaymanMama.com | News.

from CaymanMama.com | News https://ift.tt/3m6CAZu