The UBS trader being questioned on suspicion of unauthorised trading which lost the bank $2bn (£1.3bn) alerted his employers himself, the BBC has learnt. 
 
 The BBC's business editor, Robert Peston, says UBS's internal controls did not pick up the huge loss allegedly generated by its trader Kweku Adoboli. 
 
 He says Mr Adoboli told UBS that he had engaged in unauthorised trades. 
 
 The Financial Services Authority, the City regulator, is investigating why UBS did not identify the transactions. 
 
 After being alerted, UBS then examined Mr Adoboli's trading positions and informed the Financial Services Authority and the police. 
 
 Our correspondent says: "The disclosure that it was Mr Adoboli's decision to inform his colleagues of his actions that set alarm bells ringing at UBS, rather than its own monitoring system, will add to concerns that investment banks simply aren't capable of controlling the huge risks that their traders take." 
 
 Kweku Adoboli, who was believed to work in the European equities division at UBS, was still being held for questioning on Friday, having been arrested by City of London police at 3:30 on Thursday morning. 
 
 'Out of control' 
 
 Chris Roebuck, visiting professor at the Cass Business School said: "Why did the systems not spot this before it got totally out of control? This is a key question the risk systems managers must answer - but he must have found a way round the systems to get this far into debt." 
 
 UBS would not comment on the matter. 
 
 If Mr Adoboli had not revealed his activities on Wednesday, in theory the final bill for UBS could have been even bigger. Read Robert's full entry 
 
 Mr Adoboli has taken on the law firm Kingsley Napley, which also represented Nick Leeson, the rogue trader who brought down Barings Bank. 
 
 It has also emerged that UBS has come under pressure from the Swiss government to either close its investment banking operations or separate them from its retail bank. 
 
 "Even separation would have profound ramifications, in that a separated investment bank would be deemed by creditors and investors as much riskier than the current integrated, universal-banking form of UBS," Robert Peston says. 
 
 Job losses? 
 
 The credit rating agency Moody's says it is reviewing UBS's rating, focusing on "ongoing weaknesses" in the Swiss bank's risk management. 
 
 Another agency, Standard & Poor's, suggested it was considering lowering the bank's A+ rating. 
 
 UBS lost £35bn in the 2007-8 banking crisis and had to be bailed out by Swiss taxpayers. 
 
 Moody's said that although UBS was strong enough financially to absorb the loss, it had concerns about its risk controls. 
 
 "We have continued to express concerns with regards to the ability of management to develop a robust risk culture and effective control framework," the agency said. 
 
 Last month the bank announced 3,500 jobs cuts. Of the 65,000 staff worldwide about 6,000 are in the UK, with the bulk of UBS's investment banking operations based in London and New York. 
 
 It has been reported that the fresh losses from the investment bank will lead to a major restructuring of the business, involving thousands more job losses, which will be announced in November. 
 
 "We believe that yesterday's event could have personnel consequences on senior management level, which in turn could lead to adjustments to UBS' business portfolio," said Teresa Nielsen, an analyst at the Swiss bank Vontobel. 
 
 "The exit from non-core businesses inside the investment bank could be accelerated," she added. ||||| LONDON—An alleged trading scheme at UBS AG went undetected for three years before it was finally discovered, triggering a $2 billion loss, U.K. authorities indicated Friday as they charged a 31-year-old trader at the Swiss bank with fraud. 
 
 Flanked by a newly hired lawyer from a top London firm, Kweku Adoboli briefly gaped at reporters at his court hearing and said little beyond providing his birth date and address. Mr. Adoboli, who didn't enter a plea, dabbed his eyes with a tissue during a roughly 30-minute hearing at the City of London Magistrates' Court in London's financial district. 
 
 UBS Trader Charged With Fraud 4:19 UBS trader Kweku Adoboli didn't enter a plea in a London court as prosecutors began to outline alleged wrongdoing that stretches back as far as October 2008. Adoboli faces charges of fraud and false accounting. Paul Sonne has details on Lunch Break. 
 
 The charges came as an early picture began to emerge of lapses inside one of the world's largest banks that allegedly allowed a young trader on a small stock desk to cause huge losses over three years, a much longer period than initially suspected. 
 
 The alleged scheme dated to 2008, according to people familiar with the situation and court filings. 
 
 Alarm bells at the bank went off on Wednesday, when risk-management officials discovered unauthorized trades allegedly made by Mr. Adoboli on a desk that specialized in a hybrid of mutual funds. During a meeting with Mr. Abodoli, risk officials quizzed the trader, who then departed for home, according to a person familiar with the matter. He was arrested at 3:30 a.m. Thursday. 
 
 In court Friday, Mr. Adoboli was charged on two counts of false accounting and one of fraud by abuse of position. 
 
 According to the court filings, the first and second charges allege that Mr. Adoboli falsified transactions involving exchange-traded funds, or ETFs, between October 2008 and as recently as this month. A third count alleges he committed fraud between January and September of this year. 
 
 ETFs are securities that resemble mutual funds but trade like stocks, and are commonly designed to replicate the movement of an index. 
 
 A London law firm representing Mr. Adoboli, Kingsley Napley, declined to comment. Years earlier, the firm represented Nicholas W. Leeson, whose trading in derivatives led to the collapse of 223-year-old Barings PLC in 1995. Mr. Leeson later served time in prison. 
 
 Bad Bets, Big Losses A look at traders known for bad bets, including Nick Leeson. View Interactive Mike Clarke/Agence France-Presse/Getty Images 
 
 Much remains unknown about Mr. Adoboli, his trading activities and how unauthorized trades could have steered under or around UBS's risk controls, which the bank has sought to bolster after suffering massive losses on mortgages during the financial crisis. 
 
 Over the weekend, UBS may paint a fuller picture of how its risk controls failed to prevent the big loss. The bank has directed longtime outside legal counsel Herbert Smith LLP to investigate the matter. 
 
 Bank officials are expected to face tough questions as to how there could have been such a scheme dating as far back as 2008. The global financial system went on red alert that year after French bank Société Générale SA said trader Jérôme Kerviel had caused a $7.2 billion trading loss. 
 
 Regulators in the U.K. and Switzerland have launched a joint investigation of the losses at UBS. 
 
 In court, the round-cheeked trader, flanked by guards in a glassed-in defendants' area, wore a light-blue V-neck sweater over a white-collared shirt, and shifted between looking at the gallery of journalists and the magistrate. 
 
 In Ghana, where Mr. Adoboli's family lives, shocked relatives were trying to find a way for his father, a retired United Nations personnel officer, to fly to London. In an interview, John Adoboli said he first heard of the arrest Thursday when his son's girlfriend phoned. He said his son had described the job as "stressful" but one he enjoyed. 
 
 Is UBS's $2 Billion Just the Beginning? 3:19 Is UBS's $2 billion loss the tip of the iceberg? MarketWatch's David Weidner discusses the arrest of Kweku Adoboli in connection to losses at the Swiss bank. (Photo: AFP / Getty Images.) 
 
 "Sometimes I would call before I went to bed and he would say, 'Daddy, I'm still at work,"' the father said. 
 
 Mr. Adoboli, according to people familiar with the situation, worked on a small trading desk called Delta One, its name referring to a measure of trading risk and sensitivity to changes in values. The term "delta" originally was used to measure risk in options to buy or sell stocks, 
 
 His desk specialized in ETFs. But the alleged scheme centered not on the trading of those relatively plain-vanilla securities but on the hedging of risk, people familiar with the matter said. The problems ultimately snowballed into an uncontrollable situation, they said. Traders also have speculated that losses were tied to recent sharp movements in the Swiss franc. 
 
 ETFs have soared in popularity by enabling investors to bet on wide swaths of the world, including some where it can be hard to invest, with an instrument often cheaper than regular mutual funds. For instance, investors wanting to bet that population growth will lift demand for farm equipment can invest in an ETF that provides exposure to tractor and fertilizer makers. 
 
 The popularity of ETFs has drawn scrutiny, however. 
 
 In a report in June, the Bank of England said global banks are exposed to risk in the ETF market because they serve as trading partners in a market "characterized by increasing complexity, opacity and interconnectedness." 
 
 Near the Bank of England on Friday, Mr. Adoboli's hearing lasted about half an hour. He was remanded into custody and is scheduled to make his next court appearance Sept 22. 
 
 —Peter Wonacott, Sara Schaefer Munoz and Cassell Bryan-Low contributed to this article. 
 
 Write to Deborah Ball at deborah.ball@wsj.com 
 
 Corrections & Amplifications 
 
 Former Société Générale SA trader Jérôme Kerviel was sentenced to several years in prison. He remains free pending an appeal. An earlier version of this article incorrectly said he served several years in prison.
– So who was the crack financial sleuth who caught rogue UBS trader Kweku Adoboli? Um, that’d be Kweku Adoboli. UBS’ internal systems didn’t blink at Adoboli’s $2 billion screw-up; it only came to light because he brought it to his bosses’ attention, the BBC reports. The revelation is likely to undermine confidence in UBS’ ability to manage risks. (Adoboli remains in police custody and was charged today with fraud and false accounting, notes the Wall Street Journal.) “Why did the systems not spot this before it got out of control?” asks one business professor. “He must have found a way round the system to get this far into debt.” The UK’s Financial Services Authority is investigating why UBS didn’t spot the trades itself, and Swiss authorities are now pressuring the bank to either close its investment operations or spin them off into a business separate from its retail banking unit.