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Archegos sell-off

Date: 30 March 2021 Tags: Miscellaneous


The fire sale of stocks belonging to Archegos assets has caused concerns in global financial markets.



The huge margin call on Archegos was the major reason for steep sell-off that hit several global bank balance sheets.



  • Archegos Capital Management was involved in fire sale of stocks worth $20 billion which resulted in big drops in the prices of shares of companies linked to the investment firm.

  • Its main creditors, Credit Suisse and Nomura have faced loss due to transactions caused as a result of fire sale.

  • The price of share of Archegos began to tumble lately and the decline forced the prime brokers to sell the shares at low margins.


Loss to banks

  • Credit Suisse faced loss to the tune of $3bn and $4bn. Deutsche Bank also faced losses but it was comparatively lower.

  • Shares of Nomura were down by 16.3%. Credit Suisse shares went down by 13.4%. Shares of Deutsche Bank and UBS also fell.


Margin call

  • A margin call takes place when the value of a margin account falls below the account's maintenance margin requirement.

  • A margin call usually indicates that the securities held in the margin account have decreased in value.

  • During a margin call, investor should either choose to deposit more money in the account or sell some of the assets from their account.

  • If the investor is not able to pay up margin amount, the lender will sell assets lying in the investor’s account.