Firms heed Kerviel lesson by linking front and back offices
Daily news headlines
Companies move to link front and back office to mitigate rogue trading risks
BOSTON AND NEW YORK – Firms are increasingly seeking to mitigate risk by linking their front and back offices, with operations managers attempting to apply the lessons of January’s Société Générale (SG) rogue trading incident, in which Jérôme Kerviel was able to use his combination of front- and back-office expertise to dupe the bank’s internal risk control systems.
The study by post-trade operations firm Omgeo’s Americas advisory board, comprised of investment managers, broker dealers and custodians using the firm’s services, found that 88% of respondents had moved to close the gap between front and back office in response to the Kerviel example. Respondents also thought danger was imminent, with over 50% saying another SG-type incident was likely at another firm over the next 24 months.
Lee Cutrone, managing director for industry relations at Omgeo, says: “The findings of our first advisory board survey clearly indicate the importance of risk mitigation in the operational frameworks of sell-side, buyside, and custodian firms alike. Particularly in such volatile times, we need to ensure the market’s operational infrastructure is as shored-up as possible. Indeed, it takes the entire industry’s co-operation, and the survey shows that this is understood across all parties.”
Another finding, concerning trading of over-the-counter derivatives, found that over 50% of respondents expect regulation to come, and that best practice standards will not be enough to prevent regulators from tightening rules for same-day affirmation of trades.
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 print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Banks will not be frowned upon for discount window borrowing – Fed official
Risk Live: more banks have completed paperwork to access Fed lending facility than a year ago
Capital One puts OCC’s tough stance on mergers to the test
Proposed Discover deal should be approved but will go under the microscope, ex-regulators say
As FCMs dwindle, regulators fear systemic risk
Panellists highlight dangers of clearing membership becoming more concentrated
EU banks fear green asset ratios paint an unfair picture
Industry lobbyist clashes with lawmaker over usefulness of new sustainability disclosure
EU watchdogs to launch prop trader capital review in April
Prop traders say bank-style IFR rules are driving them out, but doubt EBA will suggest changes
Investors say new SEC disclosures may sit on shelf
Advisory committee questions value of rule 605 changes, even for retail investors
CFTC hears ‘call to action’ from swaps end-users on Basel III
Commissioner Pham mulls engaging with prudential regulators over capital hit on clearing
Iosco gears up for ‘intensive work’ on AI regulation
Watchdogs risk ‘falling behind the curve’, secretary-general warns; FSB also working on guidance
Most read
- As FCMs dwindle, regulators fear systemic risk
- Top 10 operational risks for 2024
- Top 10 op risks: AI fears drive cyber risk to record high