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4. Have strategies Nick Leeson used paid off in the past? Has anyone been successful with...

4. Have strategies Nick Leeson used paid off in the past? Has anyone been successful with this?

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Mr. Nicholas Leeson was the chief derivatives trader appoined in the Barings bank located in Singapore. Because of his trade activities, he was held responsible for the ultimately collapse of Barings bank. His actions would have earned him profits only in case the Nikkei would have experienced an appreciation in value in future.  He was assigned the task to harness the arbitrage opportunities that existed between SIMEX and the exchanges in Japan.

He was expected to capitalize even on the meagre price differences between the futures contract, which include the Nikkei 225 stock index,10-year JGB futures and Euroyen futures. Nobody can be successful for long in speculative or highly risky trading actvities. The losses continued to soar in and by February end 1995, they were so large that Barings bank went bankrupt. This shows that speculation and unnecessary risk trading is always detrimental.

Rahul Sunny answered 1 year ago
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