FCStone to post bad debt provision
In a conference call on 4 November 2008, Pete Anderson, president and chief executive officer of FCStone, said the company was taking appropriate actions in response to the issue. However, further losses have not yet been ruled out by the company.
It may be possible for the firm to recover some of the loss from the introducing broker under a sharing agreement, but it could not provide details on the amount and timing of recovery.
The company has added to its internal credit risk management staff, in response to the issue, and has undertaken a complete review of its clearing customers’ accounts. It has also employed an external consultant to review risk procedures, processes and systems within the firm.
FCStone has no other accounts with a similar level of exposure or risk to the energy trading account, according to Anderson. He added: “We dropped the ball with this account but the rest of the book of our business is sound and adequately margined.”
FCStone is due to announce its fiscal year end and fourth quarter 2008 results on Thursday 13 November 2008.
More on Risk management
CRO interview: Shawnie McBride
NRG’s chief risk officer Shawnie McBride discusses the challenges of increasingly interconnected risks, fostering a risk culture and her most useful working habits
Increasingly interconnected risks require unified risk management
Operational risk is on the rise according to a Moody's survey, making unified risk management vital, say Sapna Amlani and Stephen Golliker
Energy Risk Europe Leaders’ Network: geopolitical risk
Energy Risk’s European Leaders’ Network had its first meeting in November to discuss the risks posed to energy firms by recent geopolitical developments
Energy Risk US Leaders’ Network: tackling volatility
Energy Risk’s inaugural US Leaders’ Network convened in Houston in October to discuss risk management challenges caused by geopolitical upheaval, policy uncertainty and volatility
LNG trading strategies set to change amid major market shifts
The global LNG market is on the brink of significant changes set to alter trading dynamics and market behaviour, say analysts
Why commodity finance is ripe for stablecoin
Digital currency brings cost efficiencies to financing, but its real benefit to commodity firms lies in making huge pools of new capital available, write Jean-Marc Bonnefous and Ronan Julien
US shutdown leaves commodity traders without key data
Commodity traders are ‘flying blind’ without Commitment of Traders reports
Energy Risk at 30: Learning from the past
Energy Risk looks back at the seminal events and developments that have shaped today’s energy markets
