London Home To 'Every Big Trading Disaster' ? What Rubbish!

Calling London a haven of regulatory loopholes that spawns financial trading disasters is pure nonsense - and trust U.S. lawmakers and regulators to spout it.

Reuters reports that responding to attacks in the U.S. Congress on London's regulatory record, European policymakers, analysts and industry officials called the American comments ill-advised and politically driven.

'As the old saying goes, it is like the pot calling the kettle black', analysts at Mediobanca said.

A hearing in Congress - on how supervisors failed to spot the buildup of $2bn in derivatives losses at a London unit of U.S. bank JPMorgan - heard a top regulator and MPs describe London as offering a loophole American banks eagerly exploit.

'It seems to be that every big trading disaster happens in London', Carolyn Maloney, a Democratic lawmaker told Tuesday's hearing.

So let's take a quick look at some of the world's biggest trading disasters (excluding all those subprime losses which caused the financial crisis and were brought about by wrong-way bets on the U.S. housing market):

1. Amaranth Advisors (Brian Hunter) - $6.5bn (Gas futures) 2006 (U.S.)

2. Bank Negara Malaysia - $6.2bn (mostly currencies) 1992-93 (Malaysia)

3. Societe Generale (Jerome Kerviel) - $5.9bn (European index futures) 2008 (France)

4. Long Term Capital Management - $4.6bn (Interest rate and equity derivatives) 1998 (U.S.)

5. Credit Suisse - $2.65bn (mispriced debt securities) 2008 (UK)

6. Sumitomo Corporation - $2.6bn (Copper futures) 1996 (Japan)

7. Bawag - $2.5bn (Currency and interest rate swaps) 2006 (Austria)

8. UBS - $2.3bn (Unauthorised equities trading) (UK)

=9. Citic Pacific - $2bn (FX) 2008 (China)

=9. JPMorgan - $2bn (Synthetic Credit Securities) (UK)

=11. Metallgesellscahft - $1.6bn (Oil futures) 1993 (Germany)

=11 Sowood Capital Management - $1.6bn (Debt securities) (U.S)