Junior Trader Snafu Sees $6 Billion Transfer at Deutsche Bank FX Desk
- A junior member of Deutsche Bank’s FX sales team mistakenly processed a trade to a hedge fund client worth $6.0 billion.
Deutsche Bank has made headlines about its operational efficiency, albeit for all the wrong reasons, after a junior trader accidentally sent $6.0 billion to a US hedge fund, according to a recent report from the Financial Times.
Less than two years removed from a foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (FX) rigging scandal, which cast a shadow of doubt on Deutsche Bank’s operational prowess and Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term, onlookers have to be stunned by such a lapse in decision-making.
Back in June, a junior member of Deutsche Bank’s FX sales team mistakenly processed a trade to a hedge fund client that utilized a gross figure rather than a net value – what this amounted to was a number far in excess of its original value, culminating in a trade of $6.0 billion. Deutsche Bank has since clarified that the trader’s superior was on vacation at the time and thus unavailable.
Adding to the gaps in oversight is the complete failure to detect such an erroneous trade – that the trade requires a second set of eyes and review by another Deutsche Bank employee lend weight to the notion that risk management is leaky at the lender, since the trade evidently passed such a litmus test undetected.
When trading or engaging with hedge funds, banks will typically net off the various transactions through the course of the day, only sending a final payment at the close of trading session. Deutsche Bank had reported the accident to the US Federal Reserve, the European Central Bank (ECBB) and the UK’s Financial Conduct Authority (FCA).
According to John Cryan, Deutsche Bank’s new co-chief executive, in a recent memo to its staff sent in July: “Our cost base is swollen by poor and ineffective processes, antiquated and inadequate technology, too many tasks being completed using manual labour and, too frequently, unsuccessful investments in our infrastructure.”
Just yesterday, Deutsche Bank unveiled a number of sweeping changes across several divisions of its business. The overall aim of the moves has been and likely will continue to be about fostering heightened operational efficiency.
Deutsche Bank has made headlines about its operational efficiency, albeit for all the wrong reasons, after a junior trader accidentally sent $6.0 billion to a US hedge fund, according to a recent report from the Financial Times.
Less than two years removed from a foreign Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term (FX) rigging scandal, which cast a shadow of doubt on Deutsche Bank’s operational prowess and Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term, onlookers have to be stunned by such a lapse in decision-making.
Back in June, a junior member of Deutsche Bank’s FX sales team mistakenly processed a trade to a hedge fund client that utilized a gross figure rather than a net value – what this amounted to was a number far in excess of its original value, culminating in a trade of $6.0 billion. Deutsche Bank has since clarified that the trader’s superior was on vacation at the time and thus unavailable.
Adding to the gaps in oversight is the complete failure to detect such an erroneous trade – that the trade requires a second set of eyes and review by another Deutsche Bank employee lend weight to the notion that risk management is leaky at the lender, since the trade evidently passed such a litmus test undetected.
When trading or engaging with hedge funds, banks will typically net off the various transactions through the course of the day, only sending a final payment at the close of trading session. Deutsche Bank had reported the accident to the US Federal Reserve, the European Central Bank (ECBB) and the UK’s Financial Conduct Authority (FCA).
According to John Cryan, Deutsche Bank’s new co-chief executive, in a recent memo to its staff sent in July: “Our cost base is swollen by poor and ineffective processes, antiquated and inadequate technology, too many tasks being completed using manual labour and, too frequently, unsuccessful investments in our infrastructure.”
Just yesterday, Deutsche Bank unveiled a number of sweeping changes across several divisions of its business. The overall aim of the moves has been and likely will continue to be about fostering heightened operational efficiency.