One theme from the Archegos fallout is the huge, still unstatisfied KYC opportunity. Did Nomura & Credit Suisse vet Bill Hwang before extending his firm so much leverage? Did they truly "know their customer"? Exchanges & data co's KYC services help prevent this kind of blowup.
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One step closer to central clearing of OTC equity derivatives?
Seems likely. Exchanges never get blamed for defaults bc they're not the ones holding the bag. Could be a repeat of '08 where regulators push more markets on-exchange & force banks to give up more power.
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To me it doesn’t make sense to carry through bilateral transactions of that size. Obviously internal risk management doesn’t cut it. Seems like a meme but that default wiped out a lot of people’s portfolios... Wish I could invest in OCC lmao
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Problem is that CCPs don't want to clear very niche stuff so if you want something very specific it is difficult not to keep it bilateral.
End of conversation
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