lozgti

Bloomberg.com: Worldwide

They strike me as people who are a posh version of punters in a betting shop

Could any of us have a bash at it or do you need qualifications?

Love the banks comment 'we'll be ok' or something like that

boxst

I was going to write about this. How on earth can one person be able to do that? There should be safety monitors that kick in when someone loses anything.

Steve

Suresh

I expect Soc Gen's accountants are quaking in their boots right now
P1ss-poor internal controls seem to have been the culprit, not too much unlike Barings. Reckon it'll get nationalised to save it from going bust.

Loved this comment from Robert Peston's BBC weblog:



* 24.
* At 10:53 AM on 24 Jan 2008,
* Norman wrote:

Why are we surprised? It did happen, it does happen and it will continue to happen. All bank traders behave like WW11 fighter pilots, they feel immortal. And they are paid massive bonuses to gamble with sombody elses money. Go try yourself to design both a motivation approach and an operations manual guaranteed to lose big money.Strangely they will probably look like a hedge fund, a proprietary trading desk or any other trading room in a financial institution. Nobody takes fraud and risk seriously enough, we treat them as a "cost of doing business".

That is totally and utterly spot on in my view!

BBC NEWS | The Reporters | Robert Peston

warrenm2

It sounds like everyone who has written so far has no experience of city trading. I have been working on trading floors since 1997, including working with some major names (Cristian Siva-Jothy for example since prop desks were mentioned), but I can say the comments made do not reflect reality at all.

Yes it is true traders take a position made on their best estimates of the market and this could easily turn out to be wrong and lose lots of money, and some behaviour is "odd". I remember an example from an oil desk a few years ago, it was early March and they had already broken their outright record for profit for the year. I said, great you can go home now for 9 months and pick up a huge bonus at the end. He just laughed at me. I caught up with him again six months later and they had gone from £28m profit to £3m loss. Madness I agree. But things are different in the city. You are constantly competing with other people to call the market correctly and to devise new ways of making money by offering new products and services which benefit everyone. I agree they dropped the ball with CDOs, but to say they are uncontrolled and there is no risk management is simply not true. Risk managers and risk management systems attract huge amounts of money. Traders will try to play their own systems to give themselves an edge as much as playing the market. Sometimes it goes wrong, but thats part of the job knowing you could be out on your ear any time. Its high stakes and you get big winners and big losers. Today was a big loser. Soros was a big winner in 92. Sometimes the difference is actually surprisingly slight....

Suresh

I've been on the financial control side of derivative trading / investment banking since 1993 and have seen more than my fair share of spivs and charletans come and go to be honest. I have caught traders manipulating their marks or ghosting intradesk trades to mask losses. Even had traders mis-pricing exotics they sold to the management prop book for a quick million profit (which they had to give back).

For a trader with a big losing position, his downside is "oops that was my bonus" sometimes followed by "I'll get another job elsewhere easily" the next step of "oh dear I seem to have fcked the bank" isn't such a big deal to some, as we have seen.

I work on the assumption that trading and integrity don't mix, which although not completely true, is a necessary position to take in my chosen profession.

marky1

The problem with some of these bank traders is they have very little, if any personal downside. I've been a self employed trader for seven years, trading futures. If I don't perform, or I take excessive and uncontrolled risk, I lose my money, my house - everything.
Soc Gen must have had absolutely huge positions in dax and eurostoxx futures. On monday eurostoxx traded four million contracts, the norm is under a million. i suspect a good portion of business on monday was Soc Gen liquidating. It's been a long long time since I've seen such aggresive selling, probably since 9-11.
To answer the original question no I don't think it's for everyone. In fact, I think about 1% of people that start out in trading are still in it after 5 years. You can be lucky here and there, but you can't be lucky in the long run. That's not to say you need a specific education, but it does take a certain type, and at the end of the day when you see something you like you have to be able to put the nuts on the line, and that decision is not one that all people can take. I wouldn't say it's punting - there's a huge amount of information you have to monitor on a daily basis and you have to have a knowledge of how to react to specific events and data. And then there's the whole psychological aspect of trading to complicate things....