Trading System Replacement

The Situation

In an unsettling turn of events, a rogue trader’s manipulation within our Natural Gas options trading led to a staggering $680 million pretax loss. This crisis emerged at a critical juncture coinciding with the appointment of our new CEO, who was immediately thrust into the spotlight to affirm our resilience and commitment to stakeholders and regulators.

The Intervention

Our response was swift and multifaceted. Under Stephen’s leadership, we constituted a specialized team blending in-house talent and external expertise. The team coalesced around a shared goal, underwent rapid knowledge transfer and integration to foster productivity and mutual trust. Our strategy was underscored by three key pillars:

• Team Dynamics: A collaborative environment ensured quick assimilation of members vital for the project’s ambitious timeline.

• Regulatory Engagement: Through quarterly briefings, we maintained transparent communication with the Ontario Superintendent Financial Institutions (OSFI), detailing our compliance with stringent Project Management Institute guidelines and CMMI software development standards.

• Systemic Reinforcement: We honed in on creating a robust system architecture that prioritized accurate trading position measurements, eradication of manual data entry, and enhanced profitability through refined curve calculations.

Results

• Precision in Trading: Our trading positions are now measured and controlled with unprecedented accuracy.

• Operational Efficiency: We have successfully eliminated manual data entries, streamlining operations.

• Enhanced Profitability: Our revised approach to curve calculations has fortified our Value at Risk (VaR) assessments, driving profitability.