John Gapper
speaker
23 appearances
1 recordings
1 series
first heard Dec 2011
last heard Dec 2011
John Gapper’s voice in public audio — every appearance, attributed to the second.
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Appearances
By the power of greyskulls!
Yes, it's actually been tried repeatedly by different individuals in different markets, particularly with physical products and commodities.
There's one notable case in the 1990s of a copper trader called Yasuo Hamanaka, who worked for Sumitomo, a big Japanese trading company.
And he systematically tried to corner the world market in copper by buying up not only futures, copper futures, but also the physical substance itself.
That's correct.
They're a form of derivative and they're basically a contract that says I will deliver a certain amount of copper on a future date.
Normally you don't actually have to deliver it, but you settle the contract financially.
But Hamunaka actually also bought an enormous amount of copper.
At one point he controlled 5% of the world copper market and it was sitting in warehouses around the world.
Well, for a long time it actually worked out pretty well for him.
Even though other traders on the London Metal Exchange knew what he was doing or sensed what he was doing, nobody was quite sure how much he owned.
And every time people tried to trade against him, he just bought more and more and squeezed them out and actually made consistently a lot of profits.
Sumitomo was very proud of him.
They
put him in their annual report as being a great example of a successful trader.
But then the whole thing collapsed in 1995.
Well, one reason was that China started producing more copper.
Exactly.
So what he effectively did was he drove up the price, made it more economical to mine the stuff,
And then, of course, China started doing it.
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