The moral hazard is clear; it is not just rogue traders, such as Jérôme Kerviel at Société Générale, who are given huge incentives to take risk.
They had to deal with crises such as the failures of Drexel Burnham Lambert, which dominated the junk-bond market, and Baring Brothers, a British bank brought low by a rogue trader.
The demand for "risk mitigation" will gain pace, with more focus on clearing mechanisms, independent valuations and certainty in settlement to stop rogue traders.
Such conditions are almost bound to produce rogue traders.
The bank made headlines a few years ago when a rogue trader, whom Lepinay calls Kevin Voldevieille (also a pseudonym), lost billions and roiled world markets with his high-risk bets.
Joining up all the pipes in a bank is the first step to preventing the emergence of future rogue traders.
Ask a client's CEO, though, and he will likely tell you this: every CEO goes to bed at night worrying about a bad apple in their ranks-be it a rogue trader or a rogue consultant.
This brings us back to our rogue trader.
國文精選館
