Morgan Stanley Rejects Korean Chip Swap Trades After 11% SOFR Hike
MS•Morgan Stanley has turned away clients seeking new swap trades on SK Hynix and Samsung after banks raised financing costs to as much as 11% over SOFR. This move may reduce the firm’s equities derivatives revenue and reflect tighter risk appetite in leveraged Asian tech positions.
1. Morgan Stanley’s Swap Trading Restrictions
Morgan Stanley has stopped accepting new hedge fund orders for swaps tied to SK Hynix and Samsung Electronics over the past fortnight, aligning with peers who are curbing exposure to highly leveraged Korean chip positions.
2. Impact of Elevated Financing Costs
Major banks increased swap financing rates on SK Hynix and Samsung to between 300 and 1,100 basis points over SOFR, effectively pricing out some clients and prompting limits on trade sizes.
3. Implications for Equities Derivatives Revenue
The withdrawal from new swap trades could dampen Morgan Stanley’s Institutional Securities segment revenue, signaling a broader pullback in risk appetite for leveraged technology bets.
