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RISKS-LIST: Risks-Forum Digest Friday 27 November 1998 Volume 20 : Issue
09
>From the Electronic Telegraph (http://www.telegraph.co.uk:90), 19 Nov 1998:
A junior trader cost his employers an estimated 10 million pounds yesterday
after a training exercise went disastrously wrong and he ended up taking
part in an 11.5-billion-pound transaction. The trader, who is believed to
work for a German financial institution, pressed the wrong buttons on his
computer and caused panic on dealing floors in the City. Screens flashed up
with the news that someone wanted to sell 130,000 German bond futures
contracts, worth in excess of #11.5 billion. [...]
The German-based trader's employers are contractually obliged to carry out
the transaction, and will be forced to buy futures contracts in the open
marketplace to complete it. One banker said: "His employers must have
extremely lax controls. A trade that size should have sent alarm bells
ringing." [...]
German bond futures are now predominantly traded on Eurex, a German-based
electronic exchange, on which traders say it is relatively easy to enter the
dealing programme instead of the training simulation programme. [...]
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