Nasdaq must come clean

A Norwegian trader lost millions on Wednesday in a bad bet on the German and Nordic power markets, putting other members of Nasdaq Clearing on the hook for €107m in losses. The clearing house withstood the test to its capital buffers, but Nasdaq must be clear about what went wrong and what steps need to be taken to maintain confidence in its systems.

  • By Costas Mourselas
  • 13 Sep 2018
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Clearing houses — institutions that guarantee trades — have been championed by regulators and industry bodies as a great way to centralise and deal with derivatives risk in the aftermath of the 2008 financial crisis. But in the week of the 10th anniversary of Lehman Brothers’ bankruptcy, their reputation was dealt a blow. 

Some GlobalCapital sources, including a spokesperson from Nasdaq, have played down Nasdaq’s losses, saying it was an example of a clearing house doing its job. 

While that is true — the buffers did work — it is astonishing that the trader was allowed to make such a large bet without an appropriate level of margin and scrutiny from the clearing house. Nasdaq has so far provided limited details on what went wrong.  

It is now crucial for wider market confidence that Nasdaq Clearing comes clean with exactly what happened.  

Depending on why the loss happened, Nasdaq’s performance might even give rise to a review of risk frameworks for central counterparties.

But given the limited information available, it is too soon to make bold claims about the clearing industry in general.  

Historically, clearing houses have generally been effective gatekeepers of derivatives risk, and have provided a good service to the market. 

But they are not infallible. Whatever caused this week’s failure, be it poorly calibrated risk models, human error or otherwise, the review must be transparent so that the lessons can be learned across the market. 
  • By Costas Mourselas
  • 13 Sep 2018

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 281,642.23 1086 8.16%
2 JPMorgan 270,584.56 1179 7.84%
3 Bank of America Merrill Lynch 253,429.76 853 7.34%
4 Barclays 210,456.38 780 6.09%
5 Goldman Sachs 188,752.91 614 5.47%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
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1 BNP Paribas 37,171.06 156 6.65%
2 JPMorgan 34,910.99 67 6.25%
3 SG Corporate & Investment Banking 30,338.70 112 5.43%
4 UniCredit 29,482.91 134 5.28%
5 Credit Agricole CIB 27,998.53 136 5.01%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 11,322.29 47 9.04%
2 Goldman Sachs 10,369.68 49 8.28%
3 Citi 9,134.57 51 7.29%
4 UBS 6,515.43 25 5.20%
5 Morgan Stanley 6,459.47 42 5.16%