Rogue trader

Not much to say on this rogue trader thing. Plenty of articles around to read about it, if that’s your cup of tea. But just a couple of points.

1. I have read speculation that the loss was largely attributed to the trader being long CHF when the SNB intervened to lower the value of the Swissy (putting a ceilng on the CHF at 1.2 in the EUR/CHF). I find it hard to believe that UBS (Union Bank of Switzerland) would be caught entirely unaware of such a major policy shift by the SNB. Read that however you like.
2. If we do accept that it was the EUR/CHF policy action of the SNB that largely contributed to the +$2b loss, well, thats a huge victory for the SNB. Central bank interventions, such as this example, are meant to hurt. Badly.

ps. One of the WSJ online pages asked something like: “What do you call a rogue trader who makes 2 billion dollars?” A Managing Director. Love it. Its so funny ’cause its true.

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