At a time when geopolitics can be completely upended over the weekend, trades that have been agreed on a Friday but aren’t booked ’til Monday have become one of the biggest vulnerabilities in a desk’s profit and loss swing, says Oliver Blower

Since the dawn of time, City trading desks have prided themselves on their surgical precision. Duration is hedged, exposure is modelled to the nth degree, and capital is obsessively optimised. Why is it then, that one of the most persistent sources of loss making still sits outside every formal risk framework? That is, what happens when a trade is agreed, but not booked.

Sure, on a quiet day, a failed trade booking is nothing more than an irritating inconvenience to “get sorted next week”. But late on a Friday afternoon in today’s Trump sensitive world, it is a genuine risk. As prime case in point, it could be closing in on beer o’clock time in London, say 5:25pm, just when liquidity is thinning faster than the President’s tan. A rates trade is agreed verbally over the phone, but the trader already has a cool one waiting for him in the East Indian Arms and leaves the booking hanging until Monday.

The trouble is, in a........

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