Rewriting the Odds: How Market Impact Analysis Defused a Major Dispute
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April 11, 2025
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A major European regulator claimed nearly $400 million in investor losses in an arbitration against a top-tier broker-dealer. The broker-dealer engaged FTI Consulting to analyze the at-issue trades’ market impact and their effects on the related barrier option terminations.
Our Impact
- Counsel of the broker-dealer relied on FTI Consulting’s expert report to rebut the opposing party’s allegation that the at-issue trades caused the breach of 50 barrier options.
- Our findings undermined the approximately $400 million loss assertion, prompting the opposing party to return to negotiations. This ultimately led to a settlement of under $600,000, less than 0.25% of the initial claim.
- The broker dealers lead counsel expressed satisfaction: “Thanks to the strength of [FTI Consulting’s] expert witness report, the client has achieved a very good settlement outcome.”
Our Role
- FTI Consulting analyzed the broker-dealers at-issue trades in comparison to market participants’ activity and available market liquidity.
- Our experts quantified expected slippage and assessed whether the at-issue trades alone could have triggered the termination of the barrier options.
- The team estimated the probability of knock-out barriers being triggered post-issuance.
- We evaluated the opposing party’s proposed loss analysis in relation to the triggering of the barriers.
Related Information
Published
April 11, 2025
Key Contacts
Senior Managing Director, Leader of Securities, Commodities & Derivatives
Managing Director