Posted AT 6:41 AM EST on 30/01/08
The minefield of derivatives
How's this for timing: The January edition of Risk magazine named a certain French bank the Equity Derivatives House of the Year. A week later, that bank - Société Générale - was suddenly short $7.2-billion because of some unfortunate futures bets.
To be fair, not even Risk magazine's deep-thinking editors can predict a rogue trader. But still, that amusing little story does highlight an important point about derivatives. They're not dangerous in and of themselves.
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