In recent months, institutions have raised alarms about excessive leverage in the market, warning of a potential liquidation storm. From August to September, many firms internally cautioned that accumulated leverage could trigger a liquidity crisis. Despite the looming threat, institutions, equipped with robust risk management systems, are not surprised by the volatility driven by liquidity and leverage issues.
To ensure long-term market stability, it is suggested that the focus should be on incentivizing stable market makers. By providing them with better market opportunities and incentives, the market's liquidity can be maintained more effectively, reducing the risk of sudden disruptions.
Institutions Warn of Leverage Risks Amid Market Volatility
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