Implode-o-Meter News - Trader blows â‚¬100m hole in Nasdaq's Nordic power market

One of Norway's richest men has blown a hole of more than â‚¬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.
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Nasdaq cut the entire trade on Wednesday and the exchange confirmed that the loss accounted for all of the exchange's own default fund of â‚¬7m and swallowed â‚¬107m, or two-thirds, of its â‚¬166m mutual default fund that clearing house members must contribute to.
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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... .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.

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Trader blows â‚¬100m hole in Nasdaq's Nordic power market