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Old 03-20-2020, 04:59 PM
KidCharlemagne is offline
Join Date: Apr 2001
Posts: 5,514
“Unable to meet capital requirements” means they were margin called. They couldn’t come up with the money so they were liquidated. Ronin was a proprietary trading firm that made markets and speculated on Vix futures which is an index of how volatile the stock market is (based on the volatility implied by the S&P500 options price). As you can imagine, thats been pretty, pretty volatile of late - in fact the Vix was trading 14ish in Feb and printed over 80 this week. Since they were trading futures, they only had to put up about 5% (that’s average for futures) of the cash value of the securities (well, index). If the price moved more than 5% against them, they had to add more money to the account. I’m simplifying here but that’s the gist. They were typical shit traders who never learned how to manage risk. Here’s an investing tip: wait for the third hedge fund to blow up or the third credit event and then buy equities. Like human deaths, corporate deaths always come in threes.*

* Not an actual investing tip. Kid Charlemagne will not be responsible for any losses due to following the third time’s a charm rule.