Australian (ASX) Stock Market Forum

UBS trader loses $2 billion!!!

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ROE said:
it's hard to make 2B but very easy to lose.. I can lose 2B easy :)
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That's right ROE. What if we reversed the way the 2B was lost. That doesn't work either. There is a control mechanism that allows steady growth. Risk. :) Stretch the risk and the market will eat your lunch.
 
skyQuake said:
Apparently it was with the big swissie move when they announced the intervention. Currency moved 10%
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I have heard this rumour also, but i still dont get it. But unless he was leveraged to the hilt, without stops, i dont see how he could have lost this much.
 
I like how the media says "because he lost so he's arrested". He'd get a promotion if he won.

Kind of like saying bank robbers are only criminals if they get caught.
 
prawn_86 said:
I have heard this rumour also, but i still dont get it. But unless he was leveraged to the hilt, without stops, i dont see how he could have lost this much.
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Relatively easy. It was a reasonable bet that people would keep moving their assets out of euros into francs given that the EU is a basket case and Switzerland looks relatively good. It can be hard to spot in advance that the Swiss would turn out to be monetary quacks of a similar caliber, and peg their currency to the rapidly decaying EU monetary system. Turns out that they have the 'devalue currency = help exports = path to prosperity' disease too.

Such a loss is not unreasonable given a sudden 10% devaluation. Soros made more than $1B back in 1992 on a currency speculation against the pound. A 'stop' won't help you much if you had, say, a $20B position, due to the time it takes to unwind it.

Id bet anything someone saw this coming and made a $2B profit.
 
chances are it may not have been the Swiss Franc because..

"Adoboli worked as a director of exchange traded funds (ETFs) in the equities department of the bank's London offices near Liverpool Street station."

The Serious Fraud Office said it had recently warned about the "inherent dangers" of ETFs "because they are not transparent"

http://au.finance.yahoo.com/news/UK-Swiss-regulators-probe-UBS-aap-2737298542.html;_ylt=AnyEJqYMDrkC14s4X_UWqBnCWo9G;_ylu=X3oDMTE4YXY0czk0BHBvcwM2BHNlYwN5ZmlUb3BTdG9yaWVzBHNsawN1a3N3aXNzcmVndWw-?x=0
 
Where's the bank risk management department?
Where's the accountability?
How is it that 2000,000,000 isn't cross checked.?
Where is sensible regulation?
 
Do some research on Credit Default Swaps

Then you might understand what ll the fuss is about.
If the dominoes fall there will be no bail out----- Billions were manageable
But TRILLIONS------
 
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