Rogue Trading – Careers built on gambling

There’s a reason why the gaming industry often has contractual terms preventing their staff from holding an account or betting in their own shops. When people work in betting shops, online gambling and tracks , frankly the temptation to bet on anything and everything that pops onto your radar during a working day is too great. So, generally,they go and have a flutter in the betting shop down the road at lunchtime instead. Most of the time, they can’t help it you see.

They love taking risks. They thrive on the thrill of the potential win. The idea of losing pops up of course, but it soon pops off as the unconscious mind tells itself. “It’s only a tenner” , then “it’s only a twenty”. Then there are those who know what they’re doing but can’t stop because they’ve got themselves into so much hot water that they feel they have to keep going because the next bet will get them back on track (excuse the pun).

The Banking industry is not very different. It’s a risk and reward business.   In the gambling industry people setting the odds really know their sport, their news, the probability of anything in fact. The odds reflect the likelihood of an event happening and this changes as events unfold. The value of the odds on offer reflect that. Profit is made by assessing risk and reward in favour of the gambling organisation.

In the banking world, traders effectively influence prices by trading. They are recruited based on their ability to asses risk and reward really fast and well. They aim to buy low and sell high and in making trades daily they influence the market. Specialist traders really do their research. They know their markets and the products they trade in. They understand how currency fluctuations can affect stock minute by second. It goes wrong when they lose their wining streak. When they’ve made a mistake in the likely balance of risk-reward. When, they’ve taken a gamble with the firm’s money. When this happens, the temptation is to find a missing tenner or a twenty ( normally with a few noughts on the end)  The trading world is unforgiving. It has to be, because they’re playing with other people’s money. If you lose your mojo well you will quickly find your no longer drinking mojitos and eating caviar canapes. You’ll be down the dog and duck nursing half a lager with a packet of salted nuts. (no pun intended)

I’ve coached and consulted in both of these sectors, so before you start writing comments about how it’s not really like that, this is a naive representation of how the world works in these areas and the like, read it again. I’ve taken the explanation down to the simplest level deliberately.

Many people in both of these sectors are good at what they do most of the time BECAUSE they’re good at taking risks and they like to see the rewards from those risks in their salary and bonus. If you were the VP in a gambling or banking organisation you would really want these people on your team. You would actively look for the risk-reward psychology.

There is a single but important difference between these two areas of activity. Gambling in the UK is regulated to the hilt both for consumers and for the way the organisations handle their activity in real time. If they get the odds wrong and there’s a run on the betting receipts, the company pays out and investors make a loss. On the other hand, if a UK based bank runs out of money, its investors make a loss and the taxpayer pays up too. Time for a bit of banking reform to separate out retail and investment banking anyone ?

Yes Kweku Adeboli has done a terrible thing.  However, he has gained some sympathy in my book by owning up to his own actions. To me, that’s worth a lot.Being willing to take responsibility for his actions knowing the consequences of owning up holds a modicum of integrity for me.

The sooner we realise that some careers are based on gambling and stop being shocked when a risk taker takes a risk too far and tries to cover it up, the easier it will be to regulate trading.

We need to wake up and grow up.

Marie x

 

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