Banks Are Making It Harder for Hedge Funds to Leverage Their Bets After Archegos
- Even prime brokers that dodged losses are honing trading terms
- Small hedge funds are especially worried about impact on costs
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The dust hadn’t yet settled on Archegos Capital Management’s implosion, when hedge funds started shifting their bets toward banks that avoided getting hurt, hoping to keep leveraging up just like before. Good luck with that.
For weeks behind the scenes, Wall Street’s giants have been autopsying failures at rivals including Credit Suisse Group AG and Nomura Holdings Inc., identifying risks that they plan to address by more thoroughly vetting hedge funds or imposing more onerous terms on their trades, according to people close to the discussions. No one wants to be the next to tell shareholders and regulators how they failed to heed the lessons of Archegos.