Although vanilla FX might have become the key pillar to build investment banking businesses, there are also more rinky dink products for those who want bigger thrills. Often, bigger thrills equates to bigger risk and bigger profits; at times, bigger thrills also equates to bigger spills, especially when marked-to-mid turns out to be more marked-to-myth, which is a phrase I’ve purloined off my credit colleagues at Euromoney.
I believe that the readership of this column is generally smart, and also highly cynical. I don’t believe that it merely wants to read regurgitated press releases about the latest knob that’s been added to this or that platform, or how wonderful someone’s business must be because it’s had a record day in some currency nobody else trades. Reporting bad news is very much part of the job.
As we all know, there are numerous rumours about various banks taking big hits in options. Last week, I reported the sudden departure of Tim Carrington from Merrill Lynch and I believe that issues over revaluation certainly played a part, even if Merrill insists it has had a record quarter in currencies.
I’m sure now, what with the subsequent events that have led to Osman Semerci, the bank’s head of FICC, exiting through the same revolving doors, Merrill will be glad of the practice it got last week.