Reports suggesting that an offshore service in India being partly responsible for missing for missing the rogue trading that cost UBS £1.4bn seem to be accurate.
I was talking to a contact of mine today and he told me that the problem occurred at a UBS captive centre in Hyderabad.
He told me unlike suppliers, who have processes that must be adhered to, captives are less stringent. He told me that the reason the rogue trading was missed was because data had been deleted as part of a system upgrade. “If there had been a process, like that of any supplier, this would not have happened.”
Apparently when data was being migrated to a new system it started to slow things down. The person doing the migration deleted data to speed things up, which meant the trading went unnoticed.
My source tells me this would never happen with a supplier because of the strict processes and the risk of contract penalties. “The penalty for a mistake like this would be huge.”
The FSA has fined UBS £29.7m for its failings and partly blamed an ineffective computer system for the problems.