Japanese financial giant Nomura Holdings has disclosed a significant 10.6 billion yen ($68 million) loss in its wholesale division.
The crypto subsidiary of the behemoth (Laser Digital) is the main culprit behind the loss.
The disclosure offers a rare glimpse into the institutional pain caused by the "10/10" market crash.
Nomura CFO Hiroyuki Moriuchi confirmed that the losses were driven by "digital asset market movements observed in October and November," specifically citing "some long positions" that were battered by the sudden volatility.
The '10/10' aftermath
Nomura’s status as a publicly traded entity forced a disclosure that is likely to be just the tip of the iceberg.
During the Q&A session, analyst Masao Muraki pressed the CFO on how the unit, which was profitable just a year prior, swung to such a steep loss.
Moriuchi admitted that Laser Digital had held "sizable" long positions leading into the crash, which were punished when the market turned.
"Last year, in November and December, there was some market disruption," Moriuchi explained. "There is upside as well as downside, quite significant upside as well as significant downside."
Tightening the reins
Despite the $68 million hit, Nomura insists its long-term commitment to the digital asset space is "unchanged." However, the firm is taking immediate steps to de-risk its books.
"To limit short-term earnings fluctuations, we have further tightened control over positions and risk exposure," Moriuchi stated. He explicitly noted that the firm is now "reducing the volume of risk" to prevent similar volatility from impacting future earnings.
Laser Digital, which launched two years ago, engages in market making, fund management, and venture investment. The unit was profitable in Q2, but Q3 wipeout shows that institutional-grade risk management frameworks can struggle against the extreme velocity of crypto market cycles.
Godfrey Benjamin
Yuri Molchan
Gamza Khanzadaev
Alex Dovbnya