The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

National Australia Bank: Wrong revals are not an option

Demands for compensation from two currency option brokers over the rogue trading scandal of January 2004, presents the market with another act in one of the most entertaining financial farces for years.

fairfaxphotos-3027393.jpg

Much has been written about the events leading up to the currency options debacle that cost National Australia Bank A$360 million ($263 million) in January 2004. It might have been expected that, after the widespread condemnation of NAB following the scandal, the bank would have moved quietly away from the spotlight and got on with rebuilding its reputation and business.

The bank’s decision to seek “exemplary damages” in excess of A$539 million against Icap and another broker it has declined to name, but which is known to be Cantor Fitzgerald, might, in its own mind, be part of that strategy. However, the move has sparked further incredulity in the FX options community.

Option traders

NAB seems to be pinning its hopes of a “rebate” on the discovery that the two broking companies routinely passed on wrong revaluation (reval) rates to the bank. These rates were meant to be independent, but investigations from PricewaterhouseCoopers and the Australian Prudential Regulation Authority highlighted the fact that they frequently originated from NAB’s own four-strong option team. The reports stated that some of the bank’s option traders routinely sent the brokers the rates, which were then e-mailed back unaltered.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree