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by stingraycharles 1949 days ago
Was a change in collateral requirement something that was known / codified in some agreement, or was it an ad-hoc decision?
2 comments

> 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.

https://www.wsj.com/articles/how-clearing-demands-grounded-t...

WSJ says that it is formulaic.

No, they say it "is typically formulaic".

It's quite possible that this time it wasn't.

I'd say it's very likely that it wasn't formulaic this time, since Robinhood's CEO said in an interview with CNBC that we was called at like 4AM, well after markets closed, to deal with the new requirements.

Let's take a look at the formula.
It was an ad-hoc decision to go beyond the formulaic requirements.