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The futures allocation workflow leaves a lot to be desired. It’s a little shocking to me the way the process works, still to this day. You execute, and you stick all the trades in a temporary account. And then you have until the end of the day to allocate the trades. I do think this is a weak spot in the futures market.
The head of trading at a large US buy-side firm on the consequences 2020's Covid-induced futures market meltdown.
Our planning wasn't good enough. I’ll be candid: we never thought about the global non-availability of staff to anything like this degree. We talked about it – we even looked at pandemic modelling based on WHO data – but we said ‘this couldn’t happen’.
A senior executive at one large bank discusses why his firm tore up it's pandemic planning scenarios in 2019. Click here for this year's Top 10 Op Risks
This is a clearing house. They shouldn’t have the option to waive a few billion dollars [from a risk charge]. These are like government structures, in the sense that there is no alternative: they’re the CCP for the equity market. I think it’s very wrong. It shouldn’t be that easy for them to waive a few billion of what is an agreed rule.
The chief risk officer at one of NSCC’s largest members on Robinhood and moral hazard.
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Big Figure
‘Sheriff’ tussles with Robinhood
What stopped the WallStreetBets short squeeze on surging meme stocks? Risk.net has been delving through clearing house NSCC’s rule book to find out why it hit Robinhood – broker of choice to many of the retail punters betting heavily on the shares – with a $2.2 billion special margin charge just after 5am on January 28. According to the clearing house’s rule book, a broker’s excess net capital premium charge starts building when a substantial amount of its deposit requirements is higher than its total net capital. On January 28, Robinhood’s total value-at-risk deposit was around $1.4 billion – far higher than its net capital of roughly $486 million.
Read the full articleRisk Management
Quant grad conveyor belt stalls as banks retrench
Jobs market is long quant graduates, short vacancies – but hiring freeze shows signs of thawing
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Clear, concise, consistent, doable – rules for a risk policy
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Our Take
For EU banks, there can be no ‘back to normal’
Games of hazard: NSCC’s margin waiver sets bad precedent