Long-Term Capital Management

Long-Term Capital Management

Long Term Capital Management was a quantitative hedge fund whose collapse, caused by its massively leveraged positions at the time of the Russian rouble crisis of 1998, came close to causing a systemic financial crisis, and required a bailout overseen by US regulators and involving a $3.5bn capital injection by US banks. The fund had borrowed $125bn from banks, giving it huge investing firepower but also 30x leverage. It had swap positions of $1.25trn in notional value. LTCM had been founded in 1994 by Salomon Brothers trader John Meriwether, who assembled a cast of Nobel laureates, academics and previously star traders.

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