Test whether margin calls and thinner markets reinforce one another.

Family Office Private Wealth Journal · Editorial research desk · 2 November 2026

Companion to Market Liquidity and Funding Liquidity by Markus K. Brunnermeier; Lasse Heje Pedersen.

Decision in practice

A levered strategy relies on liquid securities, but its lenders can increase haircuts precisely when bid depth disappears.

Committee assignment

Shock financing terms and liquidation prices together, mapping the order of margin calls, forced sales and further collateral declines.

Record and decision rule

Daily stressed funding gap belongs to the treasurer. Stop adding leverage when available unencumbered collateral cannot bridge that gap.

Illustrative application by the editorial desk. The source authors did not evaluate or endorse this procedure.