
More multibillion-dollar rogue trading losses expected
Daily news headlines
NEW YORK – Results of the Actimize Rogue Trading Peer Review, issued today, reveal that 75% of investment firms predict another $100 million rogue trading loss in the next year. The study also shows that, in response to this perception, 85% of firms intend to modify their internal risk management controls, 75% intend to change their strategy and 60% have already created task forces to address rogue trading.
Additionally, 50% project that rogue-trading activities ranging from thousands to millions of dollars are unreported every year at their firms. Notably, 24% of respondents shared that they have experienced a case of trading fraud at their firms in the past 12 months, and 44% confirmed a case of employee fraud had occurred in the same period.
When asked to speculate why a rogue trader such as Jérôme Kerviel was not caught sooner, respondents ranked “disjointed silo systems” as the top contributor. Most institutions are still monitoring and investigating rogue trading at a group or line-of-business level. This trend is supported by the fact that 74% of respondents said they do not have an enterprise investigation tool that can look across all environments. This siloed, disparate approach is further highlighted by the fact that only 32% of respondents use a single case management platform and sophisticated analytics to combat securities employee fraud within their organisations.
Actimize initiated this peer review in the first and second quarters of 2008 due to the lack of published benchmark data on rogue trading. The peer review was managed by Infosurv, an independent research company. The project included 25 detailed responses from compliance and other experts at firms primarily located in North America and Europe. Some 48% of respondents came from firms with assets of $100 billion and over.
“Our recent peer review study as well as nearly a decade of experience in the financial surveillance market tells us that there are some inherent weaknesses in a siloed approach to transactional monitoring and risk management,” says Amir Orad, executive vice-president and chief marketing officer of Actimize. “As instruments and back-office systems continue to advance and become more sophisticated, firms today are challenged to ‘connect the dots’ across the enterprise and calculate the risk that a particular trader or employee exposes to the firm.”
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
Behnam comments fan JSCC hopes for US client clearing
Japan clearing exec welcomes CFTC chair’s pledge to keep discussing OTC clearing status for non-US houses
Top 10 operational risks: The umpire strikes back
Tougher regulatory enforcement, new consumer rules and rise of ESG are ringing alarm bells
SVB wouldn’t happen in Europe, says Deutsche CIB head
Campelli also thinks Credit Suisse’s bailed-in AT1 bonds acted as originally intended
How Finma milked Credit Suisse’s CoCos to close UBS deal
An unusual clause in Swiss AT1 bonds allowed them to be written off, but could others follow suit?
Fed’s climate stress test whips up storm for banks
Long-awaited US climate risk exercise puts tough pressure on banks’ data and models
EU banks need ‘billions’ in hedges to pass new NII test
Declines in net interest income can be hedged, but the markets may struggle to handle the demand
CFTC chair gloomy over crypto legislation prospects
FIA Boca 2023: Behnam also asks Congress to grant more powers to regulate third-party tech providers