DEBATES on whether or not derivatives traders should be responsible for the result of a transaction have been aroused by the losses at Barings and Daiwa, says the head of J.P. Morgan's derivatives trading, Mark Brickell.
'It is a large question whether one party should be responsible for the level of understanding the other party has for a transaction, and the level of risks involved,' he said.
Mr Brickell, also chairman of the International Swaps and Derivatives Association, said the topic was raised in an association conference in Tokyo last week.
Mr Brickell said regulators in some jurisdictions were considering placing 'suitability requirement' definitions on statute.
He warned that legislation requiring traders to take responsibility for their clients' level of understanding and the risk their clients were taking would not be fair.
'Dealers are more aware now that their clients' disappointment can cause very serious penalties to them - that is, losing business,' Mr Brickell said.
