I don''t have any specific inside knowledge, but I suspect the film was a fair portrayal of what happened although not entirely accurate. At the end of the day, the fault has to lie squarely with the absence of controls in the Singapore operation. I remember that, in the immediate aftermath, controlling trader risk suddenly became essential functionality for our system, but even so, systems today still do not possess basic checks - I can speak from experience at my former employer where on a number of occasions traders booked FX deals for several orders of magnitude greater than the GDP of the US. What struck me especially was the complacency of the Barings directors - one even remarked on NL's £10m profit in a single week, basically equivalent to the performance of the rest of the entire bank! The warning bells were sounding loudly...
Watching the film, I couldn't help but feel a genuine trader (I agree - I don't think NL had much trading experience, even though he managed to book that first large trade for the wealthy French geezer at a good price) would have played to his strength. Realizing that he had a huge losing long position, he could have started closing it, causing the market to drop and then following through by building up a short position. The market would have become hugely oversold, and he could then have closed his short at a good profit and reversed again into a long position to ride the bounce back up to even further profits. If all of this had been done in one, big, traumatically volatile day, he might even have been able to escape at break-even - and without having to worry about margin calls intraday. Basically, I don't think he recognized his advantage of being able to sell mercilessly and control the market in that way, rather than try and fight the market into supporting his losing long position.
Alex
