BoE Warns Against Collateral Concentration After Archegos

Law360, London (June 11, 2021, 1:36 PM BST) -- A Bank of England committee has warned investment banks against competing to win business by relaxing rules on the type of collateral they take from clients, after prime brokers lost billions in credit extended to Archegos Capital Management when it collapsed.

The Securities Lending Committee, a policy forum of regulators and market participants, raised concerns that investment banks might not be taking collateral from clients made up of good quality and diversified assets, according to minutes published on Thursday.

The prime brokerage division of an investment bank offers stock lending and trade execution to hedge funds and wealthy clients, making it a...

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