Fun with hedge funds: BNP Paribas edition

Those of you who read this blog to follow tech and startup topics may be getting dismayed that I keep talking about this hedge fund stuff. But I think an in-depth understanding of financial markets is highly helpful for a tech entrepreneur, so I’m going to keep at it.

Plus, it’s entertaining.

Financial Times today:

BNP Paribas, one of Europe’s biggest banks, blamed a “complete evaporation of liquidity in certain market segments of the US securitisation market” for the temporary decision to stop redemptions from [three of its hedge funds]…

Collapse of demand for some forms of securitised debt made their assets impossible to value, the bank said.

Freezing the funds, which invest in asset-backed securities, was the best way to “protect the interests and ensure the equal treatment of our investors”.

In financial terms, this is roughly equivalent to “destroying the village in order to save it”.