Rogue traders are an unavoidable part of doing business, and banks should concentrate on being able to keep trading even after they are discovered, Deutsche Bank's chief risk officer, Hugo Banziger, told a London conference yesterday.
Speaking at a conference organised by the London School of Economics, Banziger said: "It is vital to keep the ability to trade even if you have found fraud in the system. You will always have rogue traders - Deutsche Bank has one or two every year."
However, banks should tighten up central reporting of suspicious trades, because traders like Société Générale's Jérôme Kerviel tend to conceal their unauthorised trades "in lots of different small corners", he added.
Banziger also argued for faster communication between traders and risk officers. "Twenty-four hours is too long to get market data," he said. "The risk office must link directly to the front office", rather than receiving data through the middle office, which tends to strip out some of the details. Introducing such a system at Deutsche Bank would cost €20 million, but this would be "paltry" compared with the writeoffs caused by poor and untimely risk measurement, he argued.
Topics: Deutsche Bank
More on Regulation
ABA calls for better ways to compare bank capital between countries
US regulator will pursue a quicker route to exempt foreign CCPs
ECJ decision means new problems for data preservation
Discussion crystallises over regulatory streamlining
Sign up for Risk.net email alerts
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
Nominated for two technology awards
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.