Wheat trader loses $141.5m ovenight!
From today's Telegraph:
A sole wheat trader has triggered losses of $141.5m (£70.9m) at MF Global after a failure in the commodity broker's trading technology allowed him to breach trading limits.
MF, which was spun out of London-based hedge fund manager Man Group last summer, blamed the losses on a failure in its systems - which it says have now been corrected.
The trader, Evan Dooley from its Memphis office, was fired as soon as the losses, which were run up on Wednesday morning, were discovered.
The incident highlights the fragility of financial trading systems in fast-moving and volatile markets such as wheat, particularly at times of heightened nervousness in the financial system.
Mr Dooley is understood to have taken a large short position in the wheat futures market on Tuesday night, which turned sour when the markets opened on Wednesday morning, as volatility and prices jumped to record highs.
On the CME, soft wheat futures dropped an initial 11pc on news of MF Global's losses, but rebounded by 21pc within five minutes.
Shares in MF Global fell $4.97 to $23.42 as investors worried whether the $141.5m might be just the tip of the iceberg.
But chief executive Kevin Davis stressed that it was an isolated incident, calling it an "aberration" in MF's risk-trading systems, which he believes have now been fixed.
He also said the company will introduce limits on positions taken by all of its traders and customers, including professional traders who have not previously been subjected to MF's automatic close-out system that prevents unsustainable positions from being built.
A sole wheat trader has triggered losses of $141.5m (£70.9m) at MF Global after a failure in the commodity broker's trading technology allowed him to breach trading limits.
MF, which was spun out of London-based hedge fund manager Man Group last summer, blamed the losses on a failure in its systems - which it says have now been corrected.
The trader, Evan Dooley from its Memphis office, was fired as soon as the losses, which were run up on Wednesday morning, were discovered.
The incident highlights the fragility of financial trading systems in fast-moving and volatile markets such as wheat, particularly at times of heightened nervousness in the financial system.
Mr Dooley is understood to have taken a large short position in the wheat futures market on Tuesday night, which turned sour when the markets opened on Wednesday morning, as volatility and prices jumped to record highs.
On the CME, soft wheat futures dropped an initial 11pc on news of MF Global's losses, but rebounded by 21pc within five minutes.
Shares in MF Global fell $4.97 to $23.42 as investors worried whether the $141.5m might be just the tip of the iceberg.
But chief executive Kevin Davis stressed that it was an isolated incident, calling it an "aberration" in MF's risk-trading systems, which he believes have now been fixed.
He also said the company will introduce limits on positions taken by all of its traders and customers, including professional traders who have not previously been subjected to MF's automatic close-out system that prevents unsustainable positions from being built.