What happens when your customers don't all get liquidated
Conversation
Isn't it because the liquidated positions moved to backstop liquidity providers and hence OI stayed relatively constant? Meaning, they did get similarly liquidated but not reflected in OI?
1
1
Replying to
Depends on the position of the backstops--but if the backstops had the opposite sided position then it would reduce OI. Generally the same as if they'd traded the contract on market.
True, however the difference to liquidating to open market may be that there is way smaller number of them on the receiving side of those positions -- and statistically more likely to act similarly (i.e. end up being long after taking over liquidations and/or hedge externally)