Uridashi losses put at $500 million after Nikkei rebounds

When the Nikkei slumped last May, banks were forced to sell volatility to protect positions built up through the sale of uridashi products – leaving many with losses. A rally in the index at the end of the year inflicted further pain. In total, the industry may have lost as much as $500 million. By Matt Cameron


On page 13 of its fourth-quarter earnings report, published on February 5, UBS tries to explain a Sfr177 million ($188 million) slump in equity trading revenues. Part of the problem, it says, was the Japanese structured products book, which lost money as volatility increased in December’s Nikkei 225 index rally. What it does not say is that the rest of the industry suffered too – and not just at the end of the year.

Exotics desks were initially caught out in the second quarter, when the Nikkei

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Risk.net? View our subscription options

What gold's rise means for rates, equities

It has been several years since we have seen volatility in gold. An increase in gold volatility can typically be associated with a change in sentiment and investor behavior. The precious metal has surged this year on increased demand for safe haven…

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here