While in Singapore, Leeson focused his trading activities on futures contracts
in three major markets: the Japanese Nikkei 225 stock index, 10-year
Japanese government bonds, and euro-yen deposits. Because they were
traded simultaneously on the Osaka Securities Exchange (OSE) and the
Singapore International Monetary Exchange (SIMEX), Leeson’s job eventually
became one of taking advantage of arbitrage opportunities between the
two markets. But Leeson was not just arbitraging, and between July 1992
and February 1995 (about two and a half years), he incurred losses of over
$1 billion. How was this possible?
While in Singapore, Leeson focused his trading activities on futures contractsin three major markets: the Japanese Nikkei 225 stock index, 10-yearJapanese government bonds, and euro-yen deposits. Because they weretraded simultaneously on the Osaka Securities Exchange (OSE) and theSingapore International Monetary Exchange (SIMEX), Leeson’s job eventuallybecame one of taking advantage of arbitrage opportunities between thetwo markets. But Leeson was not just arbitraging, and between July 1992and February 1995 (about two and a half years), he incurred losses of over$1 billion. How was this possible?
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