Key controls for "detection of suspicious trading activity" failed at an India outsourcing unit, which contributed to the US$2.3 billion loss caused by a rogue trader of Swiss bank UBS, according to a joint probe by regulators.
The report by British and Swiss authorities found the bank's back office operations team was responsible for ensuring timely confirmation of deferred-settlement trades, identified through "a specific report maintained by an (the 'T+14 report')", according to an article Tuesday by the Economic Times (ET).
The U.K.'s Financial Services Authority (FSA) and Swiss regulator FINMA (Financial Market Supervisory Authority) had initiated the joint probe in Sept. 2011, following the unauthorized deals by a London-based trader which caused losses of US$2.3 billion.
According to ET, the probe found the bank's online trade supervision system SCP (Supervisory Control Portal) and the "T+14" report were key controls for the detection of suspicious trading activity, but both proved to be ineffective.
"The failures of these controls serve to illustrate poor organisation and risk management within UBS," FINMA said.
This is the third instance where