What was the Archegos Capital collapse?

Archegos Capital was a family office that collapsed in 2021 after failing to meet margin calls on highly leveraged positions. The firm had taken enormous concentrated positions in certain stocks through complex derivatives called total return swaps. When those stocks declined in value, Archegos couldn't meet margin calls from its prime brokers (banks), resulting in around $10 billion in losses for major banks and the recent $120 million settlement mentioned in this theme.

What is compliance technology?

Compliance technology (often called RegTech) refers to software, systems, and tools that help financial institutions meet regulatory requirements and manage risk. These technologies include data analytics platforms, risk monitoring systems, reporting tools, and trading surveillance software. Following the Archegos collapse, banks are investing heavily in these technologies to improve transparency, risk management, and regulatory compliance.

Why are banks investing in risk management after the Archegos settlement?

The $120 million Archegos settlement highlighted serious flaws in how banks monitor risky clients and manage complex derivatives. Regulators are now demanding better oversight and transparency, essentially forcing banks to upgrade their systems. Banks are investing in better risk management both to satisfy regulators and to avoid similar financial losses in the future, creating demand for the companies in this theme.

What are some key metrics to watch for these compliance tech stocks?

When evaluating compliance tech companies, look at recurring revenue growth (indicating stable client relationships), customer retention rates (showing product stickiness), new client acquisition (especially among major financial institutions), profit margins (showing pricing power), and regulatory developments that might drive demand. These metrics help indicate whether a company is successfully capitalizing on banks' growing need for better compliance tools.

15 handpicked stocks

Post-Archegos Compliance Tech

This carefully selected group of stocks represents companies providing the essential regulatory and compliance technologies banks now desperately need. After a massive $120 million settlement, financial institutions are under intense pressure to improve their risk management systems, creating valuable opportunities for tech providers in this space.

Han Tan | Market Analyst

Updated 2 days ago | Published at जुलाई 15