What do you do with the drunken trader? Post: 302433829

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06-30-2010

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What do you do with the drunken trader?

John Bates
06-30-2010 03:59 PM
The news that Steven Perkins, (former) oil futures broker in the London office of PVM Oil Futures, has been fined 72,000 pounds ($108,400) by the FSA and banned from working in the industry is no surprise, see article here:

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7862246/How-a-broker-spent-520m-in-a-drunken-stupor-and-moved-the-global-oil-price.html.

It could have been worse given that the broker, after a few days of heavy drinking, took on a 7.0 million barrel long position on crude oil in the middle of the night. The fine seems miniscule since it cost PVM somewhere in the vicinity of $10 million - after unwinding the $500+ million position.

The surprising thing about this incident is that it happened at all. Perkins was a broker, not a trader. He acted on behalf of traders, placing orders on the Intercontinental Exchange among other places. That he could go into the trading system and sneak through 7.0 million barrels without a customer on the other side is unbelievable.

Heavy drinking is practically a job requirement in the oil industry, my sources tell me, so this kind of thing could be a real issue going forward. As algorithmic trading takes hold in the energy markets, trading may approach the ultra high speeds seen in equities markets. This is a recipe for super high speed disaster, unless there are proper controls in place - especially if there were a way for the broker or trader in question to enrich himself in the process.

One powerful way to prevent this kind of accident or fraud is through the use of stringent pre-trade risk controls. The benefits of being able to pro-actively monitor trades include catching "fat fingered" errors, preventing trading limits from being breached, and even warning brokers and regulators of potential fraud - all of which cost brokers, traders and regulators money. PVM is a good example of this.

Ultra-low-latency pre-trade risk management can be achieved by brokers without compromising speed of access. One solution is a low latency "risk firewall" utilizing complex event processing as its core, which can be benchmarked in the low microseconds. Errors can be caught in real-time, before they can reach the exchange. Heaving that drunken trader right overboard, and his trades into the bin.

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vconsole.conf

VCONSOLE.CONF(5)						   vconsole.conf						  VCONSOLE.CONF(5)

NAME

       vconsole.conf - configuration file for the virtual console

SYNOPSIS

       /etc/vconsole.conf

DESCRIPTION

       The /etc/vconsole.conf file configures the virtual console, i.e. keyboard mapping and console font.

       The basic file format of the vconsole.conf is a newline-separated list environment-like shell-compatible variable assignments. It is
       possible to source the configuration from shell scripts, however, beyond mere variable assignments no shell features are supported,
       allowing applications to read the file without implementing a shell compatible execution engine.

       Note that the kernel command line options vconsole.keymap=, vconsole.keymap.toggle=, vconsole.font=, vconsole.font.map=,
       vconsole.font.unimap= may be used to override the console settings at boot.

       Depending on the operating system other configuration files might be checked for configuration of the virtual console as well, however only
       as fallback.

OPTIONS

       The following options are understood:

       KEYMAP=, KEYMAP_TOGGLE=
	   Configures the key mapping table of for they keyboard.  KEYMAP= defaults to us if not set. The KEYMAP_TOGGLE= can be used to configured
	   a second toggle keymap and is by default unset.

       FONT=, FONT_MAP=, FONT_UNIMAP=
	   Configures the console font, the console map and the unicode font map.  FONT= defaults to latarcyrheb-sun16.

EXAMPLE

       Example 1. German keyboard and console

       /etc/vconsole.conf:

	   KEYMAP=de-latin1
	   FONT=latarcyrheb-sun16

SEE ALSO

       systemd(1), loadkeys(1), setfont(8), locale.conf(5)

AUTHOR

       Lennart Poettering <lennart@poettering.net>
	   Developer

systemd 							    10/07/2013							  VCONSOLE.CONF(5)