J.P. Morgan fears up to $10 billion could be wiped off the balance sheets of some of the world’s biggest banks after Bill Hwang’s Archegos investment fund was liquidated last week.
The banks lent money to Hwang to buy stocks, but it looks like they didn’t realize just how much borrowed money Hwang had in his portfolio. It was harder to measure the risk because Hwang traded unconventional types of derivatives called contracts-for-difference swaps. Now, some are asking if more regulation is needed to prevent this from happening again and putting the market at risk. NTD spoke with Daniel LaCalle, Chief Economist at Tressis, about his thoughts.
