Introduction

Banks need to start being more aware when it comes to the matter of rogue trading. This needs to be for the long term rather than just trying to appease staff, investors and the media in the short term. The preventative methods should be ongoing and a consistent process. It is no longer sufficient to just merely comply with regulation as this has clearly not worked in the past, as this report will outline. Instead, the financial industry needs to wake up to the fact that rogue trading events have occurred and will occur if the organisation’s approach does not change. It is a sad indictment on people’s character but for many people, if they can get away with fraudulent activity they may be sorely tempted. That attitude needs to be quashed and the way to do this is for banks’ attitudes to start changing.

Key findings

• Crime is Indiscriminate – There is no discrimination on bank sizes, wealth, investment tier or where it is globally situated. Instead what it shows is that greed and some traders’ arrogance is in indiscriminate and demonstrates that many banks have fallen prey. However, this does not abscond banks from any responsibility regarding this topic.
• Time for change – There is a real need for information to give managers a holistitic view of all relevant operations, with sufficient IT systems that enable communications between departments, while highlighting risks and controls.
• Change is a’happenin’ – In the wake of rogue trading events last year, banks went to revisit and confirm other control framework. If there is one positive thing to come out of rogue trading scandals it is that firms have stepped up control methods against these events. However, this is not enough.
• Focus of attention – While rogue trading was still very much on the agenda, there was a distinct feeling that it was disappearing once more off the radar. This is known as Disaster Myopia.

Conclusion

Rogue trading scandals are a popular media topic designed to rile the investment banking industry and consumers. Incidences of financial crime are a sad indictment on the financial services industry due to the huge amount of losses, both in monetary terms and also reputation. Such examples of financial crime have shaken the industry but gradually the passing of time quells any sense of urgency when it comes to preventing rogue trading as other more recent events take precedence. The question still lingers as to how big a rogue trading scandal does there need to be before the industry seriously takes note and alters its monitoring and controlling methods for the long haul. It is all very well, the sector altering its practices in the wake of the scandal but realistically there needs to be a more continual conscious awareness of this act.

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Tagged with: 2009, Rogue Trading, technology, Technology Research Report