## 2008年1月25日星期五

### Warrant = 窩輪?

The breaking financial news today is that Société Générale, the second largest bank in France, reveals that one of its traders, Jerome Kerviel, has committed the biggest ever alleged bank fraud in history. Kerviel, who was supposed to create hedges for his colleagues' positions, instead betted heavily on a bull market using calendar spreads on futures. Unfortunately, since the market was in a slump over the past year, these allegedly fraudulent trades had resulted in a loss of €4.9bn (HK$\$56bn) --- over five times the scale of the legendary US\$1.4bn (HK$10.9bn) fraud committed by Nick Leeson in 1995.

How do local news agencies report this news? Ming Pao says that

【明報專訊】說到法興，本港股民可能只知道該行做窩輪生意，其實他們在世界各地均有業務...

What I find interesting here is that Ming Pao, the newspaper that is claimed to be the most credible in HK, opts to adopt the salesman's translation '窩輪' for the financial derivative that is called 'warrant'.

As you know, a warrant is basically an over-the-counter option (場外期權). In Chinese, it was formerly called '認股證' (or simply '認股證'), which I think conveys the meaning of a warrant very well. Since a year or two ago, however, salesmen from investment banks began to promote it as '窩輪', for the obvious reason that it rhymes with 'warrant' in Cantonese. Although such translation is plain silly --- the term '窩輪' actually refers to 'turbo' (as in turbocharger) in Chinese --- I used to think that it doesn't hurt as long as no confusion arises.

Yet, if you look at Kerviel's CV, you'll find that since March 2004, Kerviel has been involved in the market-making of 'open end and close end turbos'. Now what is this turbo thingy? Wikipedia says that it is actually a financial derivative introduced by Goldman Sachs in 2004. A further google search reveals that it is a form of rolling knock-out option traded over-the-counter in Germany. So, editors and journalists in local newspapers, please note: there is already a financial derivative called 'turbo' in the market.

If you call a warrant '窩輪', what should you call a turbo?

Just stop using this silly translation for warrants, OK?