4 ms·

>...they booked a $5m loss and made a policy to never trade with that particular bank again Maybe I am too cynical, but would many businesses retroactively agr

>...they booked a $5m loss and made a policy to never trade with that particular bank again Maybe I am too cynical, but would many businesses retroactively agree to a deal which would cost them a ton of money? If the Process requires Is dotted, Ts crossed, and a phone call confirmation which was never placed -why eat the loss when the other party should own the error? Citi just had a lawsuit because of paying back a loan too quickly. I expect everyone in finance to play hard ball on written agreements when it works in their favor.

seanhunter 2y ago
Sometimes it happens. Particularly in big US old school broker-dealers, "Dictum Meum Pactum"[1] is something some people take very seriously especially since you will have a fruitful (if adversarial) working relationship over many years and may need someone to do you a personal favour in the future (eg giving you a job etc). For example I know of one US investment bank where a very large options position was "booked" by a trader using a spreadsheet rather than in the official booking system which meant that the normal "exercise and expiry" alerts didn't go off to warn people when the trade was about to expire. The trader in question went on holiday and as a result the trade expired more than a billion dollars[2] in the money. The CEO of the bank called up the counterparty and successfully persuaded them to honour the trade and pay up even though it had actually expired and everyone knew there was no legal obligation. As it was explained to me at the time, the counterparty had probably hedged the trade so was not scratching around the sofa trying to find the money. [1] "My word is my bond" [2] Yes. With a b.