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The ethics of international equities... what would you do?

Wednesday 19 August, 2020
by John Jeffery
Working in the fast-paced and dynamic world of international equities, many deals are traded on a daily basis. Behind the glamour and prestige of the trading desk, back office and middle office teams ensure that the settlement process – funds transferred, shares moved – runs smoothly. Its important work; if a trade fails to settle, the consequences can be loss of reputation, interest rate charges and even fines.

It’s been a particularly busy day on the European desk, and you are working later than usual. The dealing team are already out celebrating their profits (and, no doubt, expected bonuses) and you notice a particular trade on your exceptions list. This deal did not auto-match.

A large trade came through in Turkish Lira. It’s a lot of zeroes and not in a currency that the team regularly deals with, as most transactions move through in Euros. Closer inspection shows that the reason the amount did not settle is that the nominal value your trader gave was a full decimal place out. Its late in the day, you try to call the trader to amend, but she is not available. These shares are assigned to be loaned out on the repo market by the underlying client and its urgent that it settles.

If you correct the nominal value, the trade will settle, and the deal will go through. You serve the best interests of the client who is set to complete an outstanding transaction and, what’s more you will have prevented your firm from losing money in interest. If the trade does fail over the Easter weekend there is quite likely going be a fairly significant fine. By opening an online form, adding one zero, you can fix the problem……the only thing is – you don’t have the authority to do this without the trader’s permission. 

What would you do?

  • What ethical considerations would you give to your decision-making? 
  • What is your duty in this situation?
  • Who are you most accountable to?

We encourage you to post your answers in the comments so we can create a healthy discussion, with the aim of learning from our peers, becoming aware of differing perspectives and challenging our own biases.

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Photo by Djim Loic on Unsplash


There are 2 comments for The ethics of international equities... what would you do? .

Re: The ethics of international equities... what would you do?

Wednesday 19 August, 2020
by Anonymous
Something similar to this actually happened to a friend of mine working in equities at a multinational investment bank... He was handling a trade and billed it to the wrong client! Accountability, transparency and responsibility should be at the forefront of resolving any problem that arises at a bank - he approached his MD and told her what had happened, who then engaged two other teams to fix the error. Approaching a senior without any hesitation should be the first course of action.

Re: The ethics of international equities... what would you do?

Thursday 20 August, 2020
by Chris
It is in the interest of the client and the company to complete this transaction.
However, given I don't have the authority, I would certainly discuss this with my Line Manager. If they then delegate the authority to me in writing (email), I would be able to action this with the backing of the organisation.

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