Nick Leeson, Liu Qibing, & the Rogue Trader Thing

A confession: I love rogue trader stories. From Nick Leeson on outward, they’re all domain-constrained amorality tales of greed run amok in markets that very briefly had the appearance of harmless video games — only to have the in-game monster suddenly come to life and eat the trader, then his firm, and then maybe an entire market.

This week’s example is Liu Qibing, a senior trader working for China’s State Reserves Bureau. Having apparently gone short a rapidly-rising copper market in the amount of 150,000 to 200,000 tons of the stuff (a potential billion-dollar liability), Mr. Liu has done the typical rogue trader thing of taking an unsanctioned, unexpected holiday without bringing his Blackberry. He has, in other words, run for it.

Copper markets are having fits over the news, with copper traders running the price up in anticipation that China will eventually have to cover the sizable short trade. If the Chinese end up having to meet December delivery on the copper contracts, Qibing’s trade would work out to almost half of China’s copper reserves. Ouch.

So, where in the world is Liu Qibing? After scrawling his famous “I’m sorry” note on a desk at soon-to-be bankrupt Barings Bank in Singapore, Leeson flew to an exclusive resort in Borneo, and then wandered off Frankfurt, where he was arrested. Borneo seems possible for Qibing, but I doubt Frankfurt is in the cards.

And while Liu may not follow the rogue trader script word-for-word, his employers are already off the plot. The following is from an AP story tonight:

…a staffer who answered the phone at Beijing’s State Reserve Bureau said Tuesday that Liu was not working there and that he “has nothing to do with our bureau.”

Love it. “Liu, what Liu? Never heard of him!”

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Comments

  1. C. Maoxian says:

    Mr. Paul: The trader’s surname is “Liu,” not “Qibing.” (The Chinese stick the surname in front, ya know, family values.)
    When Chen Jiulin (Mr. Chen) rang up $550 million in losses at China Aviation Oil (Singapore) last year, he didn’t make a run for it. At the time he said something along the lines of: “at worst I can always go back to my village and plant rice.”

  2. Paul K. says:

    Thanks — have fixed the surname swap in the post. And thanks for the lovely rogue trader quote: Hadn’t seen that one, and it’s a keeper.