Blockchain Development: Detect rogue trading using the Blockchain

Rogue trading is an issue that has plagued multinational banks since their inception. A rogue trader acts independently of the banks and regulations.  The banking industry as a whole loses billions due to rogue trading every year. In some cases, these losses have brought down whole banks as is the case with Barings Bank and Nick Leeson.

How It Happens

Rogue trading occurs when a trader covers up trades by booking a trade that hedges directional risk. Typically, the traders “book” these hypothetical hedge trades so that they can cover up large positions. If these positions go against the traders, the bank can stand to lose a lot of money and reputation.

How It Can Be


Policies and strict governance can prevent rogue trading but a more direct way is to integrate stricter controls on the technologies used for booking these trades. Inefficiencies and inconsistencies in databases used within banks may allow traders to hide these trades from the central risk book. DataSpartan worked on a Blockchain proof of concept platform that addressed these database inconsistencies.

How Does Blockchain Help

A Blockchain type solution allows different departments within the bank to have a consistent view of orders – this is because it is impossible to delete or change any of the executed trade orders without other departments agreeing. This provides transparency about trade execution and minimises the chance of rogue trading.

Our Results

The proof of concept is now being fully integrated into a subset of the servers in the multinational bank for live use. APIs have also been built to allow developers to interface with Blockchain functions.