![]() ![]() ![]() “There are a lot of macro vulnerabilities right now, and these things can spiral and cascade,” he said. What could put added pressure on the SEC to act was the potential that Archegos’ failure could have triggered a broader market panic, given the reported losses suffered by some globally systemically important banks in an environment of elevated asset prices where there remain serious questions about the health of a global economy that has yet to recover from the COVID-10 pandemic, Mitts argued. “We have been monitoring the situation and communicating with market participants since last week,” an SEC spokesperson told MarketWatch. Saga and the events surrounding Archegos Capital Management happened in such quick succession could spur the SEC to revisit the 13(f) regime, given recent hearings on the topic at the House Financial Services Committee and the Senate Banking Committee, where lawmakers of both parties have expressed concern over the lack of transparency surrounding the market for borrowing and short selling stocks. ![]() Extreme volatility in the market values of large, well established companies raise big questions about the stability and integrity of the markets, and that has to be a major focus for the SEC and investors,” he said. Meanwhile, Gellasch argued, that “This isn’t just meme stocks and penny stocks. “It turns out that it’s really quite critical what your trading base looks like and the market risks that might come about as a result,” he added, noting that Viacom directors may have thought differently about issuing new stock if it better understood the nature of its shareholder base at the time. “Market intelligence is critically important for boards of directors,” Joshua Mitts, a securities law expert at Columbia University told MarketWatch. Have publicly endorsed requiring institutional investors to report their short bets, but have not gone so far as to argue that synthetic bets should be made public too. ![]() Both the New York Stock Exchange and Nasdaq Inc. The backlash against the proposal from the financial services industry was nearly universal, underscoring how important market participants find these disclosures.Ĭorporate executives were one group that forcefully argued against scaling back the 13(f) disclosure regime, as they see these requirements as essential for understanding who their shareholder base is. The SEC did attempt to reform rules around 13(f) disclosure rules last year under former Chairman Jay Clayton, but the attempt was to make them less stringent by raising the assets under management threshold that triggers the report. “If covered long synthetic positions, then the counterparties could all know of everybody else’s significant exposure,” he said, adding that the large banks that were selling derivative contracts to Hwang could have understood the risks they were taking and declined to sell as aggressively to him, or hedged their risk more appropriately. That sort of market volatility, and the large losses suffered by the investment banks that Hwang dealt with, could have been avoided if the SEC were to update its rules to require that large hedge funds and other institutional investors disclose when they have large positions in a company through equity derivatives, Gellasch argued. See also: Viacom stock extends slide, as analysts chime in with lukewarm upgrades Viacom shares, for instance, fell 27% on Friday, it’s largest single-day loss on record, according to Dow Jones Market Data. Banks followed suit, selling shares in the firm’s Hwang was placing long bets on, leading to a further collapse in the value of Archegos’ portfolio. But Viacom’s decision earlier this month to issue $3 billion in new stock catalysed a slide in the firm’s stock price, triggering collateral calls that Hwang was unable to meet. ![]()
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