The Institutional Risk Analyst

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NASDAQ Dodges a Black Swan


New York | Q: How do you say “black swan” in Norwegian? A: sort svane. But hold that thought for a moment.

Last week readers of The Institutional Risk Analyst probably did not notice the failure of a small NASDAQ clearing member in Scandinavia. The dollar amount of the default event was relatively small, but the details are disturbing in terms of the use of hidden leverage in the trade and the potential risk to central counterparties (CCPs) such as exchanges.

The NASDAQ made the following statement:

“On Monday September 10, 2018, the markets in Nordic and German power experienced an extreme movement in the spread. One of Nasdaq Clearing´s members had a portfolio containing a large spread position between Nordic and German Power that was negatively impacted by the fluctuations.”