Mr. Copper
Who Is Mr. Copper?
Mr. Copper was a well known epithet for Yasuo Hamanaka when he involved his position as head of the metal-trading division of the Japanese trading company, Sumitomo, to corner the world copper market.
Grasping Mr. Copper
Mr. Copper, or Yasuo Hamanaka, rose to noticeable quality during the 1980s by making Sumitomo the biggest copper trader in the world on account of aggressive and unlawful investment strategies in copper futures and options. At a certain point Hamanaka controlled 5% of the world's copper supply, which proffered him another moniker: Mr. Five Percent. Hamanaka was reportedly particularly glad for this last option moniker, as it was a name likewise associated with celebrated oil trader Calouste Gulbenkian.
Before being revealed as the rogue trader who was at last responsible for $2.6 billion in losses for Sumitomo, Hamanaka was widely respected for his copper market investment strategies, which made Sumitomo a world leader in copper regardless of the way that the company had no copper mines of its own.
Eventually, Hamanaka was indicted for fraud and falsification and imprisoned for a considerable length of time, and keeping in mind that Sumitomo denied information on Hamanaka's unlawful trading activity, the company at last paid out $150 million to settle claims with regulators.
How Mr. Copper Cornered the Commodity Market
Hamanaka had the option to conveniently control the copper market since he had acquired various futures contracts for Sumitomo, well beyond their huge holdings of physical copper. Since copper is a illiquid commodity, the 5% copper holdings of Sumitomo put them in a predominant worldwide position, basically enabling them to control the world copper price through the London Metal Exchange. Hamanaka utilized his power to his advantage, depending on cash and maintenance of long positions in copper to force out investors who attempted to short the commodity. While Hamanaka's market controls were common information among traders, the London Metal Exchange was not required to report on positions, thus data uncovering Hamanaka's genuine degree of control was not available to demonstrate his activities.
Moreover, Sumitomo had the option to add to their overall profits through commissions on transactions. The critical bump is due to the price of copper being misleadingly high for such a long period of time.
This all started to be revealed secondary selling conditions changed in the 1995, and an increase in copper supply laid the ground for a market correction. Sumitomo's long positions in copper at the time made for a critical liability to the company, and it was in 1996 that Hamanaka's rogue trading was revealed.
In the consequence, regulations laid out by the London Metal Exchange have killed the possibility of a repeat of this sort of commodities market cornering.
Highlights
- At a certain point Hamanaka controlled 5% of the world's copper supply, which proffered him another epithet: Mr. Five Percent.
- In the result, regulations laid out by the London Metal Exchange have disposed of the possibility of a repeat of this sort of commodities market cornering.
- Mr. Copper, or Yasuo Hamanaka, rose to noticeable quality during the 1980s by making aggressive and unlawful investment strategies in copper futures and options.
