(Norwegian) Trader blows €100m hole in Nasdaq’s Nordic power market

Discussion in 'Wall St. News' started by Laissez Faire, Sep 13, 2018.

  1. Power trader Einar Aas has been impressively consistent and have made huge amounts of money from the markets as an independent trader for many years now. Multiple years he's had the highest income in Norway. Thus, these news were quite unexpected and sad.

    Seems like he's been both overleveraged and caught in an abnormal market move. His entire fortune and even more is gone.

    Trader blows €100m hole in Nasdaq’s Nordic power market

    NASDAQ Default Notice
    TraDaToR likes this.
  2. destriero


    Aas has like $100MM in real estate alone. He'll be just fine.
  3. There's been a press release by him personally where he's stating that he's personally bankrupt.
  4. destriero


    What's he gonna say? Come take my RE investments?
    Here4money and zdreg like this.
  5. If he personally owes money, that's the expected outcome anyway, isn't it?
  6. schweiz


    This shows why the ever compounding trading and becoming the richest man on earth is BS. He was far richer then me, but things can change: now I am ahead of him. :D

    Einar Aas will easily find people with money to start again in a partnership. So he will come back.
  7. zdreg


    Trader blows €100m hole in Nasdaq’s Nordic power market Loss raises questions over clearing-house controls on eve of Lehman anniversary Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save Save to myFT Philip Stafford and David Sheppard in London 2 HOURS AGO Print this page128 One of Norway’s richest men has blown a hole of more than €100m in a stability fund that ensures the safety of derivatives-trading in European electricity markets. Coming in the same week as the 10th anniversary of Lehman Brothers’ collapse, the trading losses will focus attention on the robustness of standards promoted by policymakers globally after the financial crisis. Einar Aas, a private trader who has been among Norway’s highest earners in recent years thanks to aggressive bets in European power markets, saw his positions collapse on Monday after extreme market moves in German and Nordic energy markets. Nasdaq, the principal trading exchange where futures contracts tied to physical energy markets in the Nordic region are transacted, said Mr Aas had defaulted on Tuesday after he was unable to meet margin calls at its clearing house on lossmaking trades. In a short statement Mr Aas said he suffered huge personal losses and likely bankruptcy. Nasdaq said he was barred from trading on the exchange. Authorities singled out clearing houses as pillars of global market stability to withstand the next financial crisis. These entities stand between two parties in a trade to help prevent the fallout from defaults rippling through the market. Nasdaq said the size of his positions blew through several layers of safeguards designed to protect the clearing house from hefty losses. Mr Aas was clearing his own trades, rather than going through a broker. Aside from having lost his initial margin on the trades, he will also lose the €36m he provided as additional margin as the trade soured. That prompted Nasdaq to cut the entire trade on Wednesday and the exchange confirmed that the loss accounted for all of the exchange’s own default fund of €7m and swallowed €107m, or two-thirds, of its €166m mutual default fund that clearing house members must contribute to. Recommended Financial crisis: Are we safer now? After the crisis, the banks are safer but debt is a danger With Nasdaq and members of its clearing house repairing the damage, questions as to how a single trader could come close to wiping out the clearing house’s layers of protection will merit the attention of regulators, including the European Central Bank. Members of the clearing house include some of the biggest banks and energy traders such as Morgan Stanley, UBS and Equinor, Norway’s state oil company. They will receive a letter from Nasdaq in the coming days requesting the payment of the funds within 48 hours. The catalyst for the trading loss was a series of backfiring bets on the price difference between German and Nordic power markets, according to multiple sources in the industry. Mr Aas’s trades were positioned for the gap between the two to narrow, but instead it widened sharply to a level 17 times larger than normal. That move was triggered, in part, by a jump in the price of carbon allowances in Europe that have been the best performing commodity so far this year and a source of bumper profits for hedge funds and investment banks. Rising carbon prices, which are trading at a decade high, have dragged up natural gas and electricity markets in continental Europe. At the same time, a forecast of wetter than previously anticipated weather in the Nordic region, where hydropower is a big contributor to electricity supplies, pushed prices on the so-called Nordpool market far lower. Mr Aas had a taxable income of Nkr833m ($101m) and a fortune of about Nkr2.1bn ($245m) in 2016, according to the Norwegian government’s public tax return data. The media-shy energy trader, from Grimstad in southern Norway, worked at Interkraft Trading, owned by Agder Energi, before leaving to trade with Nkr250,000 ($30,000) of his own money, according to Norwegian newspaper reports.
  8. destriero


    Not in my experience.
  9. "Aggressive bets" is indeed the key term here...
  10. comagnum


    Wow, that Norway trader left a prop shop to trade with $30k and built it up his fortune to $245M. This guy sure is a model for "Go big or go home!".
    #10     Sep 13, 2018