Delta One Desks Are Big Moneymakers
Susanne Craig and Azam Ahmed (DealBook/NYT)
September 15, 2011

“The $2 billion trading loss that has rocked the Swiss banking giant UBS has also cast a spotlight on a relatively unknown but increasingly profitable corner of Wall Street — Delta One desks. Both Kweku Adoboli, the UBS trader in London arrested on Thursday in connection with the loss, and Jérôme Kerviel, the Société Générale trader who was responsible for $6.8 billion in losses in 2008, worked on such desks. … Whatever the cause, the UBS trading losses are likely to rekindle the debate over proprietary trading, which has drawn increasing scrutiny from regulators since the financial crisis. The so-called Volcker rule, under the Dodd-Frank overhaul of financial regulation, would prohibit such trading, although the details of the rule are still being written. …On Thursday, advocates for the Volcker rule used the UBS trading loss to highlight the need for increased regulation. A statement from Americans for Financial Reform said the incident ‘once again highlights a central problem with our financial system — that the largest banks have grown so big and so complex that even their own management cannot fully understand or control the risks they take.’ The statement further noted: ‘Stories of rogue traders point to a larger problem which must be addressed with these kinds of structural changes,’ like the Volcker rule. Click here for more.