UBS losses were down to the person, not the instrument

There has been a fresh flurry of criticism of exchange-traded funds (ETFs) in the wake the news that a "rogue" trader on UBS' "delta one" desk incurred some $2 billion in trading losses. Details are beginning to emerge but many have already pointed the finger at ETFs. By way of background, delta one trading desks deal in derivative instruments whose objective is to mimic the performance of an underlying asset or benchmark on a 1-to-1 basis. Such instruments include swaps, futures, forwards, and ETFs. Delta one desks most frequently engage in a variety of arbitrage trades aimed at exploit...