Today is the last day for many hedge funds to accept withdrawals per end of September. A lot of times the 45 day rule is applied to allow investors to withdraw money per end of the third quarter. That might become a huge problem for many hedge funds because they need to liquidate positions afterwards - which again leads to higher margin requirements everywhere due to higher volatility - and which again forces hedge funds to liquidate even more positions.
probably a lot of hedge funds will make money on this but a lot will go bust and thus endanger the banks who financed both the good and bad hedge funds. As a result banks get hammered and with it the market as a whole. Also financial institutions will liquidate all kinds of assets to meet their obligations -- and as a result many asset classes like gold etc will fall as well.
It would really help us if you give us a hint how much the banks will behammered ?! And maybe you will tell us also which assets will be liquidated, so we can make some profitable trades....Specific suggestions ??
You sound a little confused about the facts. What banks have FINANCED hedge funds? The whole idea of the investment banks running hedge funds with 3rd party money is getting the risk off of their balance sheets with outside investors. The people getting burnt here are private and institutional investors that provided the capital for the funds, the IBs usually "only" get burnt because they make less in future fees and commissions.