Rogue trader loses $2 billion at UBS

(Last Updated On: September 16, 2011)

Rogue trader loses $2 billion at UBS

It is speculated that the trader in question, an equities trader based in London, may have bet on the continuing strength of the CHF and suffered a devastating loss when the SNB intervened to peg the CHF at 1.20 to the EUR.

What kind of position would it take to lose $2 billion? A fairly enormous one, actually. If the entire loss was taken in EURCHF, the trader would have had to been short EURCHF 15 billion from 1.1050 and closed the position out at 1.2150–the full magnitude of the sharp move incurred on Sept 6. Granted, this extraordinary move took but a minute or two to occur, and its possible the position was not in EURCHF but USDCHF or some other CHF-based cross (or a combination thereof). Nevertheless, the underlying exposure must have been staggering, and in all likelihood involved a (short, naturally) options position.

One can only marvel at the intricacies of the UBS back office accounting and risk management systems that such a position could be taken by a single trader, let alone maintained for any length of time, without senior management being aware of it, especially by someone in another area of the bank (equities, rather than FX).


UBS said on Thursday that a rogue trader in its investment bank had lost $2 billion, another blow to the struggling Swiss bank.


are you sure it was FX? according to my knowledge it was on equity and Not eur chf.


Well, read the link I posted. Besides, what other market has moved in large enough magnitude to lose $2 billion recently, even with an enormous position on?



NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

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