An accident waiting to happen?

Article Abstract:

The rapid expansion of derivatives trading has already led some observers to express concern about the inedequate regulation of derivatives markets. These fears now appear to have been justified by revelations that the collapse of merchant bank Barings could have been caused by the actions of a single trader, who entered into 'open ended' positions. Costly accidents have already become common in derivatives trading, but this is the first case of a significant financial institution being extensively damaged.

Laws, regulations and rules, Derivatives (Financial instruments)

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Barings dealer's 1m pounds sterling boast

Article Abstract:

Barings dealer Nick Leeson, who is now at the centre of the scandal surrounding the bank's sudden collapse, is reported to have boasted that he was making a large contribution to the bank's profits and that he had been offered a bonus of almost 1 million pounds sterling. It has now been established that he gambled on very dangerous derivatives transactions, and some observers believe that he was deliberately trying to ruin the bank.

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Baring the City; breaking the bank

Article Abstract:

The collapse of merchant bank Barings was originally attributed to the secret activities of a single trader, Nick Leeson. However, further investigation has revealed problems with ineffective management, corporate greed and supervisory incompetence. The case reflects very badly on Barings as a whole, and ultimately on a financial system which clearly does not have effective checks, balances and controls.

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