Greg Ritchie

9) The risk management failure means Argentex's market value appears to be almost wiped out. Talks are continuing with IFX over further liquidity support, with the outlook for the company's over 150 employees uncertain. Full story via @business @markets bloomberg.com/news/articles/…

8) It's a dramatic fall from grace. Just weeks ago, the company waxed lyrical to investors of its turnaround plan, while company insiders were snapping up shares. If IFX's takeover proposal for the company is accepted, those shares are now down 94% from last week.

7) Other FX brokers offer zero-zero lines, and the risks can be mitigated by holding excess cash and ensuring their overall trading book isn't skewed toward one currency. Yet Argentex had not done that sufficiently, the people said. bloomberg.com/news/articles/…

FX broker Argentex almost collapsed this week in the face of margin calls from banks including Barclays and Citi, people familiar with the matter said. That’s partly because of a high-risk strategy with some customers known as “zero-zero lines." 🧵Here's how it unfolded 🧵

6) It also complicates risk management. While your banks can margin call you, you can't then margin call clients you've offered these terms to – exacerbating the threat of a liquidity mismatch.

5) Yet Argentex was among firms pursuing zero-zero lines with some of its corporate customers, declining to ask them for either an initial deposit of margin or so-called variation margin in response to how the trades fared, the people said. That helped them attract clients.

4) As the dollar slumped this month, Argentex began facing margin calls from these banks. That's not unusual, and typically an FX brokerage could then demand similar levels of margin from its own clients to protect itself. bloomberg.com/news/articles/…

3) Argentex acts as a middleman between corporates and global banks. It entered into derivatives agreements with these banks, agreeing to post collateral — or margin — for its trades. This is a buffer against potential losses that banks can seize and sell if bets begin to sour.

2) Argentex built its name offering staid hedging strategies to corporates looking to fortify their balance sheets against the vagaries of the $7.5-trillion-a-day foreign-exchange market. Recently it had been amassing US dollar trades for clients: bloomberg.com/news/articles/…

More coverage of the Scottish government's bond sale plans – to be dubbed "kilts" in reference to "gilts" – here: x.com/greg_ritchie/s…

The Scottish government is seeking a financial adviser for the nation’s debut debt issuance, though it's proving more costly than expected. The expected value of the contract has tripled to £1.5 million. For @BloombergUK @neilrchatterjee bloomberg.com/news/articles/…

Here's our story from 2021 which first reported Scotland's plans to raise funds on capital markets during the current parliament, potentially via a green bond. Today's documents show government will seek external advise on green issuance: bloomberg.com/news/articles/…

Key to the new assessment is "indirect economic benefits," such as developing relationships with global investors, banks and credit-rating agencies. All things that would give a future independent Scotland an economic head-start: bloomberg.com/news/articles/…

New: Scottish government analysis finds selling bonds can "offer value for money," paving the way for an inaugural issuance in the coming years: bloomberg.com/news/articles/…

French 10-year borrowing costs match Greece’s for the first time bloomberg.com/news/articles/… via @greg_ritchie

🚨Personal news: After two and a half wonderful years at the Standard I am leaving to become the new editor of @UKTNofficial

The V20 Group,which represents countries among the world’s most exposed to climate change, is calling for a mixture of hard and soft trigger events in cat bonds. For market professionals, the asset class is working as intended because it is only meant to insure extreme disasters:

In Jamaica's case, its cat bond didn't trigger after hurricane Beryl last month owing to central pressure readings coming in a few millibars too high in key zones. The Philippines chose not to renew its cat bond when it lapsed, preferring an indemnity insurance policy.

Catastrophe bonds have been handing investors double-digit returns, while countries have seen their costs soar. Some are now questioning whether they offer value for money to poorer, disaster-prone nations. Via @climate: bloomberg.com/news/articles/…