SEC raises concerns over hedge fund Rokos after losing bond bet
The U.S. Securities and Exchange Commission has expressed concern over Rokos Capital Management after a huge bet on U.S. Treasuries earlier this month backfired, forcing hedge funds to hand over large sums of cash to banks as collateral. bottom.
SEC Chairman Gary Gensler mentioned hedge funds in a conference call with UK regulators this week as they faced higher margin demands than their peers, according to a person familiar with the matter.
US regulator based in London Locos However, after a string of recent blows in the banking sector, it is wary of strains in financial markets. British regulators have agreed to monitor hedge funds, one of the people said.
The conversation highlights regulators’ concerns that a rapid unwinding of concentrated hedge fund investments could increase tensions in the U.S. Treasury market, which forms the basis of asset prices around the world.
The episode stems from the failure of a Silicon Valley bank earlier this month and concerns about the broader health of banks. US regional banking systemAfter the SVB collapsed, investors bought US Treasuries betting that the US Federal Reserve (Fed) would slow the pace of rate hikes to bolster financial stability.
When bond prices rose, many hedge funds held off on the rally, but industry insiders said Rokos one of the biggest Short term loser. The Financial Times reported on his March 17th report that several counterparties are committing more assets to meet margin calls, according to two people familiar with the matter. He demanded that the fund drop by 12.5% in one month.
However, a person contacted by the FT said he was not concerned about Rokos’ ability to meet the margin call.
Unlike many other macro hedge funds, which tend to be more diversified, most of Rokos’ leverage is in the government bond market.
Billionaire Chris Rokos, who co-founded hedge fund Brevan Howard, hit the headlines in late 2021 when he was forced to sell a huge amount of short-term government debt. He has since reduced the amount of market risk he was taking and earned more than 50% of his last year before losing this month.
Locos, the UK Financial Conduct Authority, the Bank of England and the SEC declined to comment.
https://www.ft.com/content/225d3f76-8695-4752-b895-877eadea8dd9 SEC raises concerns over hedge fund Rokos after losing bond bet