Not following you here, the hedges of the Swap & CFD market makers would end up on the exchanges, so market impact wise you gain nothing?
If Archagos had made their bets w/stocks or options on an exchange, they'd have a small position with little leverage & would've been pushed around by HFT. CFDs and swaps were the only way to get extreme leverage & secrecy for such a concentrated bet.
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On exchange: brokers know who’s buying what, dont extend extreme leverage, Archegos has to disclose positions above a certain size Off-exchange: dont own underlying, no one knows how much u own, can press bankers for more leverage
End of conversation
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Trading with half a dozen investment banks gives their trading more secrecy than trading anonymously on an exchange? More leverage & fewer reporting reqs for sure, but not more trading secrecy.
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From september they would have needed to post IM to their PB and vice-versa (due to UMR)... Meaning probably this extreme OTC leverage would've been impossible
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Only the secrecy point applies. That is the unique component that Archegos obtained via TRSs, because otherwise they would've hit a disclosure requirement. Nothing at all to do with HFT. And leverage can be extended by a bank on cash equity trading too (this is v normal).
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