DJ How Clearing Demands Helped Ground the WallStreetBets Stocks
By Telis Demos
When some online brokers including Robinhood Markets Inc. and Webull Financial LLC moved this week to restrict trading in GameStop Corp., AMC Entertainment Holdings Inc. and other stocks, fueled by Reddit's WallStreetBets forum, they did so in part because of obligations with clearinghouses that help ensure trading across the market isn't disrupted by defaults. Here's how it works.
What is a clearinghouse?
Consider the basics of trading: Buyers and sellers must agree on a price. The buyer then must pay the seller, and ownership must be formally transferred.
Enter clearinghouses. The clearinghouse collects and distributes payments and transfers ownership. So traders are free to focus just on price, and to take the best price in the market regardless of who is offering it. Neither side has to worry about the other's ability to pay.
For stocks in the U.S., the main clearinghouse is National Securities Clearing Corp., which is part of a larger clearing organization that operates in other markets, called Depository Trust & Clearing Corp.
How do they work?
Clearinghouses serve to mutualize risk. Members keep cash or collateral such as Treasury securities at the clearinghouse to cover their own activities and the obligations of other members should they fail. The clearinghouse might ask the members to post more of this money, often known as margin, if they are making riskier trades. The aim is to ensure that no individual member's failure causes the whole system to collapse.
How does the financial crisis figure in this?
In response to the 2008 collapse of broker-dealer Lehman Brothers Holdings Inc., lawmakers writing the Dodd-Frank Act sought to beef up supervision of clearinghouses and to push more trading into clearinghouses. The focus was primarily on so-called over-the-counter derivatives, like credit-default swaps, that didn't have a central marketplace. The reforms also affected some longstanding clearinghouses, including National Securities Clearing Corp., by designating them as systemically important financial market utilities, which subjected them to greater regulatory scrutiny.
Why would a clearinghouse have to increase requirements?
As noted earlier, margin requirements often rise with risk. A sharp rise in the price of any security raises the prospect that it will decline just as fast, potentially adding to the risk of those trading and holding as collateral these securities.
A challenge in the stock market is that settlement is not instant. The system allows two days after the day a trade happens until the shares and money must change hands, known as "T+2" settlement. Over those two days, the risk that a party might be unable to complete a trade can, in rare circumstances, change dramatically based on market conditions.
One such circumstance might be when the price of a security is extraordinarily volatile. In that case, the seller is exposed to increased risk that in the event of a failure of a buyer to pay up, the security they would be stuck still owning is worth dramatically less. The extraordinary volatility of a stock like GameStop would increase such a concern.
Another is the risk that a party suddenly owes an outsize amount of cash. In a normal market, any clearing member likely has a mostly balanced book of buys and sells, meaning they are both paying and receiving cash. And often many of their own customers' trades cancel each other, meaning they have no net obligation to the clearinghouse. But when a firm has a huge imbalance of buy orders, its obligation to pay cash skyrockets. This may have been the case this week, when there was much demand for just one or two stocks.
So who decides it's time to increase margin requirements?
How a clearinghouse judges these risks, and therefore when it makes demands for more upfront funds, is typically formulaic. Margins can be based on equations such as value-at-risk. Exactly how the formula works, and who is responsible for losses in what order, are important elements. In the case of National Securities Clearing Corp., losses would be covered by the defaulting member's funds before the clearinghouse's own funds or other members' funds would be used.
A broker like Robinhood would also have to make decisions about its own capital, and how much it was willing or able to tie up in settlement. A broker may face separate obligations for capital levels, like with the SEC. Other brokers also clear via another intermediary -- like Apex Clearing, through which WeBull clears -- that is a member. These intermediaries may have their own risk controls they apply to their clients.
Write to Telis Demos at telis.demos@wsj.com
(END) Dow Jones Newswires
January 29, 2021 19:33 ET (00:33 GMT)
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DJ清算需求如何帮助WallStreetBets股票接地
Telis演示
本周,包括Robinhood Markets Inc.和Webull Financial LLC在内的一些在线经纪商在Reddit的WallStreetBets论坛的推动下,采取行动限制GameStop Corp.、AMC Entertainment Holdings Inc.和其他股票的交易,部分原因是它们对票据交换所负有义务,以确保整个市场的交易不会因违约而中断。它的工作原理是这样的。
什么是票据交换所?
考虑一下交易的基本原则:买卖双方必须就价格达成一致。然后买方必须向卖方付款,所有权必须正式转让。
进入票据交换所。票据交换所收集和分配付款,并转让所有权。因此,交易员可以自由地只关注价格,并在市场上获得最好的价格,而不管是谁在出价。双方都不必担心对方的支付能力。
对于美国的股票,主要的清算机构是美国国家证券清算公司(National Securities Clearing Corp.),它是一个在其他市场运营的更大的清算机构Depository Trust&Clearing Corp.的一部分。
它们是怎么工作的?
票据交换所起到了共担风险的作用。会员在票据交换所保留现金或美国国债等抵押品,以支付自己的活动和其他会员在倒闭时的义务。如果会员进行风险更高的交易,票据交换所可能会要求会员贴出更多这笔钱,通常被称为保证金。其目的是确保不会有个别成员的失败导致整个系统崩溃。
金融危机是如何影响到这一点的呢?
为了应对2008年经纪自营商雷曼兄弟控股公司(Lehman Brothers Holdings Inc.)的倒闭,起草多德-弗兰克法案(Dodd-Frank Act)的议员们寻求加强对票据交换所的监管,并推动更多交易进入票据交换所。重点主要放在所谓的场外衍生品上,比如信用违约互换(CDS),这些衍生品没有一个中央市场。这些改革还影响了包括国家证券清算公司(National Securities Clearing Corp.)在内的一些历史悠久的票据交换所,将它们指定为具有系统重要性的金融市场公用事业公司,这使它们受到了更严格的监管审查。
为甚麽结算所要提高要求呢?
如前所述,保证金要求往往会随着风险而上升。任何证券价格的大幅上涨都会增加其下跌速度同样快的可能性,这可能会增加那些交易和持有这些证券作为抵押品的人的风险。
股市面临的一个挑战是,结算不是立竿见影的。该系统允许交易发生后两天,直到股票和货币必须易手,即所谓的“T+2”结算。在这两天里,一方可能无法完成交易的风险,在极少数情况下,可能会根据市场状况发生戏剧性的变化。
一种这样的情况可能是当证券价格异常波动时。在这种情况下,卖家面临的风险增加,如果买家无法付款,他们仍然持有的证券价值将大幅缩水。像GameStop这样的股票的异常波动会加剧这种担忧。
另一个风险是一方突然欠下一大笔现金的风险。在一个正常的市场中,任何清算会员都可能拥有一个基本平衡的买卖账簿,这意味着他们既在支付,也在接受现金。而且,他们自己的许多客户的交易往往相互抵消,这意味着他们对票据交换所没有净义务。但当一家公司的买入订单严重失衡时,它支付现金的义务就会飙升。本周可能就是这种情况,当时只有一两只股票的需求很大。
那么,是谁决定是时候提高保证金要求了呢?
票据交换所如何判断这些风险,从而何时要求更多预付资金,通常是公式化的。利润率可以基于风险价值(Value-at-Risk)等公式。这个公式到底是如何运作的,以及谁应该按什么顺序对损失负责,这些都是重要的因素。在国家证券清算公司(National Securities Clearing Corp.)的案例中,损失将由违约会员的资金弥补,然后票据交换所的自有资金或其他会员的资金才会被使用。
像罗宾汉这样的经纪商还必须决定自己的资本,以及它愿意或能够在和解中捆绑多少资金。经纪商可能面临单独的资本水平义务,就像与SEC一样。其他经纪商还通过另一个中介机构(如WeBull通过其清算的Apex Clearing)进行清算,那就是会员。这些中介机构可能有自己的风险控制,适用于他们的客户。
写信给Telis Demos:telis.demos@wsj.com
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