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The end game sums up how dire the whole sorry business was: In March, 2021, the broker gingerly ''asked'' Archegos to consider a new proposal under which it would recharacterise $1.35 billion of the $2.4 billion in [[excess margin|excess]] [[variation margin]] ''it currently held for Archegos'' as [[initial margin]]: ''asked'', that is, when it was contractually entitled to ''demand'' that, and more, on 3 days’ notice. And, while ''thinking about it'', Archegos systematically demanded CS ''disburse the entire $2.4 billion''. | The end game sums up how dire the whole sorry business was: In March, 2021, the broker gingerly ''asked'' Archegos to consider a new proposal under which it would recharacterise $1.35 billion of the $2.4 billion in [[excess margin|excess]] [[variation margin]] ''it currently held for Archegos'' as [[initial margin]]: ''asked'', that is, when it was contractually entitled to ''demand'' that, and more, on 3 days’ notice. And, while ''thinking about it'', Archegos systematically demanded CS ''disburse the entire $2.4 billion''. | ||
===Prologue=== | |||
We like to imagine the conversation went a little bit like this. | We like to imagine the conversation went a little bit like this.<ref>''[[Disclaimer]]: this dialogue is entirely made up, but based very loosely on a true story.</ref> | ||
{{quote|''It is early March 2021. A ZOOM CALL, conducted between the home office of a RISK OFFICER at CS, who is wearing PPE, wiping his monitor and disinfecting his hands every ten minutes, and a TRADER at ARCHEGOS, who is perched at a bar in the Bahamas nursing a pina colada and multitasking with a game of online poker.'' | {{quote|''It is early March 2021. A ZOOM CALL, conducted between the home office of a RISK OFFICER at CS, who is wearing PPE, wiping his monitor and disinfecting his hands every ten minutes, and a TRADER at ARCHEGOS, who is perched at a bar in the Bahamas nursing a pina colada and multitasking with a game of online poker.'' | ||
CS: Hi, guys. Listen, we are a bit concerned that your risk has got out of hand. We’re badly under-margined. <br> | CS: Hi, guys. Listen, we are a bit concerned that your risk has got out of hand. We’re badly under-margined. <br> | ||