The direct cause of the bankruptcy of Bahrain Bank is that nick leeson, the futures manager of Bahrain Company in Singapore, misjudged the trend of Japanese stock market. 1995 1 10 In October, Allison was optimistic about the Japanese stock market and bought a large number of futures contracts in Tokyo and Osaka respectively, hoping to make a big profit when the Nikkei index rose. Who knows that something unexpected will happen in the future? The Sakamoto earthquake in Japan hit the rebound momentum of the Japanese stock market, and the stock price continued to fall. The final loss of Bahrain Bank was as high as $654.38+0.4 billion, while its own assets were only several hundred million dollars. The huge losses are irreparable, and this once brilliant financial building collapsed. So, why did this financial derivative transaction manipulated by Nick Leeson destroy the whole Bahrain Bank in a short time? First of all, we need to have a correct understanding of financial derivatives. Financial derivatives include a series of financial instruments and means such as buying and selling options and futures trading. Specifically, it can be divided into forward contracts, forward fixed contracts and forward contract options. Such derivatives can trade tangible products, such as oil, metals and raw materials. And financial products such as currency, interest rate and stock index. Theoretically, financial derivatives will not increase market risk. If we can use them properly, such as hedging, it can provide investors with an effective hedging method and reduce risks. However, while it has a positive effect, it also has a fatal danger, that is, in a specific trading process, investors pay a small amount of margin for speculation and buy large contracts, often ignoring the potential risks of trading. If it is not properly controlled, this kind of speculation will cause immeasurable losses. Allison of Bahrain Company in Singapore, it was the improper operation of derivatives that destroyed Bahrain Group. During the whole transaction, Alison was eager to make money, but in the case of heavy losses, she still put all her eggs in one basket, increased the purchase volume and turned a blind eye to the potential risks in the transaction. As a result, Bahrain Bank became the victim of derivative financial products.