Interactive Brokers (Nasdaq: IBKR) has reportedly announced an increase in margin requirements for MicroStrategy Inc. (Nasdaq: MSTR) products, effective January 8-13, 2025. The broker will raise maintenance margin requirements to a minimum of 50% for all MicroStrategy-related positions, including stocks and equity options.
What’s noteworthy is the timing, with market speculation regarding legacy positions from the 2021 Archegos Capital Management collapse.
On X, analyst @DarioCpx noted the parallels to previous risk management decisions, citing a January 2021 Credit Risk Management review that downgraded Archegos’s internal credit rating from ‘BB-‘ to ‘B+’, a less severe action than the originally proposed two-notch downgrade. This decision placed Archegos in the bottom third of Credit Suisse’s hedge fund counterparties.
Of particular interest are derivative positions allegedly connected to GameStop shares. He suggests that certain over-the-counter derivatives structured by Credit Suisse for Archegos and other hedge funds may be approaching maturity, potentially requiring the delivery of underlying shares.
Related: Prosecutors Seek 21-Year Prison Term for Archegos Founder Hwang
The 2021 Archegos collapse highlighted critical issues in prime broker risk management, particularly regarding credit rating assessments and the monitoring of positions across multiple prime brokers.
Credit Suisse’s own review revealed that senior management was unaware of Archegos’s position concentration across six other prime brokers until after its default.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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