How The Risky Business Of Derivatives Trading Can Dismantle Even The Biggest Of Banks
By Matt Schilling:When investors began to trade in the after-hours session on Thursday May 10th news broke of JPMorgan Chase (JPM) losing nearly $2 billion dollars as a result of derivatives trading. Those trades were initiated by one Bruno Iksil from JPM's Chief Investment Office located in London. According to Jamie Dimon, and noted by CNBC, "the losses came from trading in so-called credit derivatives and the strategy was designed to hedge against financial risk, not to make a profit for the bank". Dimon then promised, "In an email to employees and in a conference call with stock analysts, to get to the bottom of what happened and learn from the mistake".Over the last few months, Mr. Iksil has become known as the 'London Whale' because his positions were so large they were able to throw off the regular behavior of the already complex market for credit and credit based derivatives.Complete Story »
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