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According to the Bank for International Settlements in Basel, Switzerland, the entity that sets global banking standards, in 1998 about 30percentt of the trade in developing country debt was accounted for by leveraged hedge funds -- fickle investors that tend to pull money wholesale out of one market to cover margin calls on losing investments elsewhere.
The margin calls on those loans were sudden and unwelcome.
Margin calls on transactions in derivatives are expected to increase dramatically too.
Schwab said that margin calls on Tuesday ran to three times their usual level.
Some of the Mattel shares were sold to meet margin calls on the loans.
Large margin calls on the pound and yen have also been behind the yen buying.
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It can also issue a notice of insufficient system margin, calling on power firms to increase the amount of energy they make available.
While the size of the margin call on the $950 million position was not specified in the counsel's prepared testimony, the New York Fed used the cash to pay off $3 million in trading fees.
Among the most exposed to Mr. Deripaska is Raiffeisen bank in Austria, which last fall refinanced a 500 million euro Deutsche Bank loan to rescue Mr. Deripaska from a margin call on his construction business.
In July, the founder and chief executive, Glenn Welstad, was forced to resign after the board accused him of taking an unauthorized loan of $3.5 million to cover a margin call on his Labor Ready stock.
Arnold Silverman, a 74-year-old retired stereo salesman in Boca Raton, Fla., said his portfolio value jumped early this year and then crashed early this week, nearly forcing him into a margin call on the $300,000 he has borrowed to buy stock.
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