"Des volumes de cette importance ne passent pas inaperçus" — François-Xavier Demaison
I watched L'Outsider over the week-end. This is the movie about Société Générale trader Jérôme Kerviel, whose bets on the Euro Stoxx 50 (traded on Eurex), Xetra DAX (traded on Eurex) and FTSE 100 (traded on Euronext.liffe) cost €4.9 billion to the bank in January 2008. We discussed this stunning affaire in Ethics in the Financial World. I thouroughly enjoyed the movie. Because Kerviel was well-versed in all things IT, he was able to conceal a sizeable portion of his trades. Who is to blame? Christophe Barratier, the film director, skillfully leaves that question open (*).
Not long before the implosion of Kerviel's trades, in October 2007, Eurex complained to Société Générale that Kerviel's positions amounted to 30% of open interest in DAX futures. In the movie, members of the trading desk refer to futures positions as Spiel. There was obviously a massive failure of compliance—although the bank had a strong reputation in that regard. What also transpires is a world totally dominated by ... men. Apart from Kerviel's lover, his mother and a strong-minded compliance official who shows up towards the end, women play no role in the movie. And this was precisely part of the problem.
Too much testosterone in the (trading) room!
(*) "Kerviel n’aurait jamais dû être trader", L'AGEFI, 22 June 2016
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