Hedge funds and the rebound in collateral velocity

Reuse rate of collateral points to growing fragility and interconnectedness in financial markets

speed-317443001

Collateral velocity, an often-overlooked measure of fragility in financial markets, hit its highest level in a decade at the end of last year as global banks responded to the hedge fund industry’s growing appetite for leverage.

According to their latest annual reports, the world’s 18-largest dealer-banks held $9.4 trillion of pledged collateral on their books at the end of 2020, up more than 50% since 2016. This was driven primarily by an increase in collateral velocity – the reuse rate of

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

Register

Want to know what’s included in our free membership? Click here

This address will be used to create your account

Digging deeper into deep hedging

Dynamic techniques and gen-AI simulated data can push the limits of deep hedging even further, as derivatives guru John Hull and colleagues explain

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here