Trading System Replacement

The Situation

A rogue Natural Gas options trader hid market values of trades and caused a $680 million pretax loss. Stephen led the Capital Markets Commodity Products team to replace the existing trading platform with a new front to back office system and improved real-time interfaces to risk control systems. The CEO was new in the job and needed to demonstrate for shareholders and regulators that effective steps were being taken.

The Intervention

A three pronged approach was required. A dedicated Vendor and technology team, led by Stephen, was assembled and co-located for the duration of the work. Many team members were new and knowledge transfer and coaching was provided so that people could become productive as quickly as possible. It was critical that trust and good working relationships were developed quickly. Quarterly communication updates were provided by Stephen to the Ontario Superintendent Financial Institutions (OSFI) Regulator. In addition, to updates on the functionality, the Regulator was supplied with details on bank/project adherence to Project Management Institute guidelines and CMMI software development standards. The minimum viable product for the delivered system was well defined. Significant effort was put into creating representative test environments and training front office traders and mid / back office operators. On launch, the business was able to move ahead with reduced risk and stronger monitoring of trades.

Project Result

1. Improved measurement and control of trading positions;

2. Eliminated occurrences of manual entry of data; and,

3. Improved repeatability/approach for curve calculations aiding profitability and VaR (Value at Risk) calculations