The deadly derivative game
Justice Pillay had made a major ruling against Deutsche Bank of the lost of $59m for recommending derivative trading to a client few days back. In 3 months, the client, Dr Chang Tse Wen, lost $59m! This must be a kind of a record for the speed and the sum to be lost by an individual client.
The client was recommended to put money in discounted share purchase programme commonly known as accumulator. Whatever names they called it, derivatives, in whatever combinations or clever arrangements, are nothing more than betting slips. They are not investments but high risk betting or gambling.
How could such gambling slips be approved and be sold so widely across the world is troubling. The amount of derivatives bought and sold is mind blogging and could be the very instrument that could collapse the world financial system. But many high net worth clients would have to go first, losing their millions and their pants.
Investors who do not know how the derivative games are played are best to stay clear from such instruments.