UniCredit Did a Commerzbank Trade
Swaps, collars, Citi Bike, biblically responsible investing and texting regulators about work.
Here are two equity derivatives trades that you might do if you wanted to be a big shareholder of a public company.
First, you might want to buy shares on swap. You might decide one day that you’d like to own 11.5% of some public company. But you can’t just go out and buy 11.5% of the company, for some regulatory reason. In the US, for instance, you might need to get antitrust approvals, or you might want to avoid filing a Schedule 13D disclosing your position. Or in Europe, there are European Central Bank regulatory restrictions on owning more than 10% of a bank, so if you want to buy 11.5% of a European bank you need to get ECB approval first. But if you go and get the approvals, that will tip off the company and the market, and then the stock will go up (“ooh there’s a big buyer”) and/or the company will scramble to fight you off (“ooh there’s a big hostile buyer”).