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Morgan is one of the worlds leading global investment affirms, with the client from corporations, governments, states, municipalities, healthc ar organizations, educational institutions, banks and iinvestors sector around the world. It is also well cognize for providing Securities Services, Asset Management, Commercial Banking, Private Banking and treasury service.These different financial services are offered to their customers maintaining an ethical standard as well as having employee dedication in the workplace. It is such kind of financial service provided that is committed to perfect efficiency, mitigate risk and enhance revenue with is valued assets. Despite of be such a reputed company for such a long epoch the in May 2012 they incurred loss of 2 one thousand thousand USD in the first quarter. Besides these, they are also assuming that this loss with increase by another $1 billion in the second quarter. After incurring the loss their portion issue piece falls by 7% a day.They fall experience from Credit Rating (AA-). They lose the grocery store and customers satisfaction. Few institutes are canvas on such loss in the financial market. The U. S. Security flip Commission is having a preliminary investigation into JPMorgans accounting practices and public disclosures nearly the occupation loss. Besides these the U. K. s Financial Services Authority examined the piece London employees played in the loss. In the end, one of the executive of the bank claimed that the loss was originated from he firms Chief Investment Office (CIO).The Wall way Journal reports a trader at J. P. Morgan known in the market as the London Whale made large bets on address differential coefficients. Iksil apply a little-known index of 125 firms CDX IG 9, which iincluded the Campbell Soup Company and Walt Disney. They ground their estimates on the trades and price movements of credit default swaps complex instruments used as a type of insurance against companies d efaulting they witnessed as well as their sagaciousness of the size and structure of the markets. J. P. Morgan says his unit is meant to hedge structural risks.The fai direct hedge credibly involved a bet on the flattening of a credit derivative curve, part of the CDX family of investment grade credit indices, said two sources with acquaintance of the industry, but not directly involved in the matter. JPMorgan was then caught by sharp moves at the long end of the bet, it said. The CDX index gives traders exposure to credit risk across a range of assets, and gets its value from a basketball hoop of individual credit derivatives. In essence, JPMorgan made a series of bets which moody out very, very adly. proprietary trading, using their own funds to take bets on financial markets. The two hundred7-09 financial crisis originated in the deterioration of traditionalistic home mortgage lending, as opposed to banks short-term trading of strange financial instruments for profit. Pr oprietary trading has a bad image because its so easily likened to gambling. The JPMorgan trading losses come at a severe time for the internationalist banking system as it faces up to risks linked to the Eurozone debt crisis and international economic uncertainty. J.P. Morgan lost the money by betting its own smashingalbeit while hedging risks much of the discussion since the news has been on the Volcker encounter, which bans banks from trading for themselves rather than their clients. JP Morgan started buying share for their own rather than their clients. So when the rule is announced then they fall in big trouble. This is also led them to incur the huge loss. In a conference call disclosing the puzzle on Thursday, Dimon said the $2 billion in losses could burn down by a further $1 billion.However a 2 billion dollar loss for JP Morgan is nothing compared to their total exposure of over 70 trillion dollars. Overall, the 9 largest U. S. banks have a total of more than 200 trill ion dollars of exposure to derivatives. That is approximately 3 times the size of the stainless global economy. So lets not make too much out of this 2 billion dollar loss by JP Morgan. This is Just a preview of coming attractions. Soon enough the real problems with derivatives go out begin, and when that happens it will shake the entire global financial system to the core.