Credit Suisse is triggering margin calls on clients that use Russian resources as collateral.
With Russian assets falling in value, it’s causing a domino effect that’s going to affect all global ties to Russia.
Margin calls are going to affect banks and financial institutions to close and liquidate their positions.
Welcome to Franknez.com – margin calls are on the horizon. And it’s going to tank the stock market even lower.
Let’s dive right into it!
Join the newsletter to receive weekly market news and updates.
Wealthy individuals face frozen accounts
The invasion of Ukraine has left wealthy individuals invested in Russian assets with frozen accounts and demands for more collateral.
In a margin call, banks ask investors to add cash or securities to a portfolio that typically includes borrowed funds when the market value drops below margin requirement.
The bank can forcibly liquidate clients’ holdings if they are unable to deposit the funds.
Credit Suisse told PBI that its position in the matter remains unchanged.
“Credit Suisse serves its clients while complying with all applicable laws and regulations, including any sanctions from relevant authorities,” the firm said.
This isn’t affecting just Europeans; Credit Suisse is imposing margin calls in the U.S. too.
How is this affecting investors in the U.S.?
Getting rid of Russian assets is a big problem for hedge fund managers in the U.S.
Russia’s central bank retaliated by banning Russian brokers from selling securities held by foreigners.
Furthermore, Russian Prime Minister Mikhail Mishustin said the country will temporarily stop foreign investors from selling Russian assets.
Hedge funds in the U.S. holding Russian assets are in a big mess right now.
Margin call tension is causing liquidation in many areas of the market.
U.S. hedge funds will be forced to liquidate positions or hedge their plays, further overleveraging short positions.
Financial institutions in the U.S. exposed to Russia
Citigroup disclosed in its annual report that it has nearly $10 billion in exposures to Russian counterparties, including loans, reverse repo agreements and cash deposits.
Citigroup stock is down more than 11% year-to-date.
Morgan Stanley’s next gen emerging markets fund (MFMIX) has also been exposed to Russia.
Nearly $16.6 million is frozen due to Russian sanctions.
That’s 13.6% of the total net assets of $122 million in the fund.
Schwab’s fundamental emerging markets large company index ETF (FNDE) has also been affected.
Out of the $4.8 billion in assets, 12.7% have been exposed to the Russian stock market.
Related: Regulators are taking Morgan Stanley and hedge funds to court
Credit Suisse aids U.S. probe of rivals Morgan Stanley and Goldman Sachs
Credit Suisse is trying to help the U.S. Department of Justice build a case to block trading against rivals Morgan Stanley and Goldman Sachs, REUTERS.
The bank delivered a presentation to the U.S attorney’s Office in New York flagging issues leading to the collapse of Archegos Capital.
Archegos Capital was a private family office, also known as unregulated hedge funds, that caused banks to lose billions of dollars.
Banks and hedge funds are currently under investigation by the Justice Department for illegal trading activities.
Two of these banks under investigation are Morgan Stanley and Goldman Sachs.
One hedge fund has been raided by the FBI for flooding the market with fake orders to drive the price of stocks down.
It comes as no surprise Credit Suisse is imposing margin calls on investors but also attacking its rivals.
What does this mean for shareholders?
Leave your thoughts in the comment section below.
You can follow me on: Twitter | Facebook | YouTube | LinkedIn
About The Author
It means we’re finally going to see the small & mid-cap’s squeeze as Janet Yellen was going on about just this last Winter.
$AMC $GME and so many more in the ‘basket of Meme’s’ are soon to pay out on their negative beta, their FTD’s, the synthetics, and so on… this house of cards has met prevailing winds.
🔥🔥🔥🔥
And the retail investors are blamed for
America’s Oligarchs shorting/trading with fake shares 2 to 3 times the # of issued shares, 10 yrs or more Madoffs formula and have for many years. How 2 times the issued shares magically appear from? BBBY was hit GME too. Pepperidge Farms. And most everyother shuttered business too
CEI since Aug. Hedge funds are stealing at Will with fake shares
Gary Gensler is ignorant or involved maybe
in office over a year and no idea these funds Plotkin Yass Griffin and most the other funds are stealing from their investors 401k of working reg Joe’s
repeat Offenders most were with Bernie at 1 time
And just pulling millions with faked shares
It’s been proven last week and this week
If you have money with them get it out or lose it all
A Copy of our Constitution Ken Griffin bought with stolen funds and all his worldly goods by fraud
The Evidence proves it
And they are now in need of a bailout from stealing out of the taxpayers pockets after Stealing by Fraudulent Trades from thier own investors 17mil copy of the Constitution obtain with OPM “OTHER PEOPLES MONEY”
Russian Criminals don’t hold a candle to the criminals we will refurr to as
AMERICAS OLIGARCHS
Could be very good but I don’t want to speculate and taking it day by day.
Let’s start a discussion!