Global banks are tightening financing and limiting new swap exposure for hedge
funds long SK Hynix and Samsung Electronics after a year-to-date chip rally and
rising volatility raised pullback risk. Citi, JP Morgan and Goldman Sachs have
raised financing costs on equity swaps used to go long the two Korean names;
banks have also cut deal sizes and narrowed eligible counterparties. Morgan
Stanley is declining new swap trades in both stocks, and several smaller banks
stopped taking new orders in the past two weeks. Banks still executing new
business are vetting trades case-by-case; BofA, BNP Paribas and UBS have also
increased swap financing costs and imposed size limits.
