Triggers of August market ‘flare-up’ still in place, BIS warns
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Leveraged
positions
remain
at
risk
of
sudden
unwinding,
as
margin
calls
play
amplifying
role
Bank
for
International
Settlements,
Basel
A
postmortem
of
the
August
5
market
shock
by
economists
at
the
Bank
for
International
Settlements
(BIS)
finds
that
many
triggers
of
the
“flare
up”
still
pose
threats
to
stability.
The
analysis
highlights
how
risk-taking
worldwide
is
still
high
and
says
some
of
the
positions
unwound
during
the
shock
were
quickly
rebuilt.
It
also
underscores
how
leverage
and
margin
calls
continue
to
act
as
amplifiers
of
shocks,
given
the
wide
and
growing
use
of
market-based
finance.
The
authors
–
Matteo
Aquilina
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