NAB currency options desk 'back in the market', with limited trading

Sources in Melbourne said NAB is back in the market – mostly unwinding positions, but also trading "fresh" options, though a source at the bank said the desk has not "fully re-opened".

Regulator the Australian Prudential Regulation Authority (Apra) barred NAB from trading foreign exchange options until it had rectified risk management lapses responsible for a A$360 million (US$280 million) hole in its currency options portfolio originally reported in January.

A spokesperson for NAB in Melbourne said the bank is currently working with Apra to address the issues raised in its March 24 report. An Apra spokesperson in Sydney said it was unable to discuss its communications with NAB, although a source close to the regulator said there was no reason to believe the April 30 requirement – a review of the bank’s traded risk limits – would not be met.

This was the most important of Apra’s demands, which it described as the "minimum" to be achieved before NAB could start trading forex options again.

NAB is also making efforts to resolve its failed options pricing processes – which meant the traders were able to input their own revaluation data to mask losses – by trialling a range of risk management systems, according to market sources.

And the bank has already made large strides in the "key staff changes" Apra referred to in its report. On April 21, it appointed Lynne Peacock, the bank’s executive general manager in Europe, to manage "people and culture functions". The bank has also replaced its chief executive, chairman, head of risk management, head of markets, head of corporate and institutional banking, and both co-heads of global foreign exchange in the wake of the crisis.

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 or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

You need to sign in to use this feature. If you don’t have a 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