Shadow Banking

by C. M. Albright

Bob rubbed his hand across his forehead, flustered and annoyed. 'All right, I can receive sixty-one for five year annual threes for up to one hundred million Marks. I see that as mid.'

  Rob turned back to his screen and clicking off the mute button once more said, 'Mac, can you pay sixty-one? I can do up to a ton. You can do the lot? Excellent!'

  Rob clicked on the mute button and without even looking across at his red faced colleague, he called out: 'Bob, you’re done,' before clicking it off again and saying into the receiver, 'Cheers Mac, appreciate it mate. Jen will give you a call to agree the deets in a sec. Also, next week Ivy or Le Gavroche, you choose. Pick the day. We’ll go deep on the wine list. Thanks, Squire.'

  Rob hung up and turning to the woman in her mid-twenties on an adjoining desk who had scrutinised his deal as closely as the graduates, said, 'Can you take care of the confo and the booking, Jen, and confirm the fixing dates with Mac.' Jen nodded and started tapping away on her keyboard.

  It was a weird feeling for Al. It felt as though he had just received a vicarious hit of adrenalin. He had no idea what had just happened, who had done what, who had bought what or indeed, if anything had been bought at all. The magnitude of the task ahead of him – to be able to understand this business and flourish in it – hit home for the first time. It was scary.

  'Sorry about that,' said Rob with a grin that said he wasn’t sorry at all. 'Right, let’s move on to the last group on the trading floor: Foreign Exchange. This is a place where a number of you will end up working.'

  At the far end of the room were three rows of desks. 'These are the FX options boys,' said Rob, smiling. 'Never underestimate how clever they are.' A couple of the traders looked up and rolled their eyes at Rob who waved expansively. 'And here, not clever, just frightful, we have the spot and forward FX desks.'

  Nearly all the computer terminals in this section of the trading floor had paper and cardboard signs stuck to them with nicknames and slogans written on them. The largest and most prominent had 'BOMB ALLEY' written on it. Rob pointed in its direction and said, 'These are the spot and forward FX trading desks. The spot guys trade foreign currency against each other for spot settlement, usually working two days after the trade is done. The forward guys trade it for any days apart from that.'

  'Excuse me, can I squeeze past,' said a genial, heavy-set man making his way through the group of graduates.

  'Your squeezing past days are long gone, Keith, or should that be, Agent Cooper,' said the equally chunky trader to his left as Keith collapsed into his chair, acknowledging the laughter from his colleagues that this comment had aroused. Al looked at the paper sign crudely taped across the top of Keith’s screens on which was written: 'Twin Peaks,' a reference, Al could only imagine to his hefty set of man boobs.

  'You’re one to talk,' said Keith. 'You’ve piled on so much beef recently, you’ve got more chins than a Chinese phone book.'

  A female voice with a French accent emanating from a speaker box cut through the chatter: 'Cable in forty for Big D, please.'

  The effect was instantaneous; Keith grabbed a phone while the other spot traders swung around in their chairs to face their screens.

  'Sure,' yelled Keith. 'Make him … Thirty, forty.'

  'Showing.'

  'Change,' shouted Keith.

  '’Ow now?'

  'Get the calls ready guys.'

  The other spot traders on the desk entered into a frenzy of activity as their fingers played the keyboards with practised ease.

  'OK, it’s a lot higher,' said Keith. 'Forty, fifty.'

  'Yours!' came back the voice.

  'Shout them out,' said Keith as he grabbed the phone and hit one of the numerous buttons on his desk.

  All of Keith’s colleagues started shouting out numbers.

  'Forty-two, forty seven?' enquired the man on Keith’s right.

  'No,' came back the reply.

  'Forty-four bid?' came another voice.

  'Give him.'

  'I’ve sold five at forty-four Bank Madrid, Keith.'

  'Ten yours,' said Keith into the phone.

  'Forty-two, forty-seven,' said another spot trader.

  'Yours,' said Keith.

  'Two bid again, I’m hitting it for you,' said the trader on Keith’s right.

  'Forty, forty-four,' came another voice.

  'Yes,' said Keith. 'Right, how many did I lose?' asked Keith.

  'Thirty-seven, forty-two?'

  'No. Many left?'

  'Oh, I’ve got a forty bid!'

  'Yours.' Keith turned to the man next to him who had made the Agent Cooper quip and said: 'Twenty-five all day with the desk?'

  'Yeah mate,' came back the reply.

  'I sold ten in the bookies as well so I’m just five long,' said Keith. 'Bloody thirty-five offered now. Wonder if I got spoofed when it came in higher after the first rate?'

  'Dunno mate. Maybe just a bit unlucky. Worth keeping an eye on the next time he deals with us though.'

  Rob stepped back from the entrance to Bomb Alley and turned to the graduate trainees: 'Ah the joys of spot FX,' he said with a grin. 'Nothing like a good call out to clear a buzz from a couple of pints at lunchtime. That French lady that you heard there works in our bijou Paris office. Her client, codenamed Big D, wanted a price in forty cable. Cable is the slang for the exchange rate between Sterling and Dollar and the forty referred to forty million pounds as the notional amount of the trade. The rest of the desk called out to lots of banks and sold smaller clips of Sterling to help Keith get out of his position. Don’t worry,' said Rob in response to some of the blank faces amongst the trainees. 'It’ll all make sense soon enough. Right, I’ll take you down to HR now and they can bore you to death. But how about I see you in the Golden Hind over the road later? I’ll be down around five.'

  Dow Jones Index: 3830

  Fergal doubted he had ever looked forward to getting into the pub so much. He often laboured under the illusion that the sky was about to fall on his head when he had a hangover but right now that impression was multiplied tenfold. Visiting the trading floor was like crash landing on another planet.

  The pub was busy, full of lots of City people as he now thought of them. He made his way to the bar first. Whilst others might have come along only to appear sociable on their first day on the job, Fergal, on the other hand, felt supremely comfortable in this world. This was his domain.

  'OK, so who’s having what then?'

  He might not have been able to remember all his new colleagues’ names, but he had no problem remembering their drinks orders and by the time he had ordered the first round and paid up, he was on first name terms with the bar maid. As his lips broke through the creamy froth on the Guinness and the dark liquid beneath was up-ended down his gullet, he began to relax.

  'So what made you leave Dublin behind for this?' Fergal looked around and there was Imogen looking up at him, awaiting a response. The inability to speak coherently to attractive women was something that Fergal had wrestled with and attempted to medicate with gallons of Guinness over the years but it was still an affliction that he had been unable to shake off.

  The words just wouldn’t come.

  'I love Dublin,' continued Imogen. 'Such a beautiful city.'

  Fergal found himself nodding. If this had been a man that was speaking to him, he would have been well into an amusing anecdote by now about drinking in Dublin’s pubs and bars but all he could do was look down at Imogen’s face and keep opening and closing his mouth like a fish.

  For Christ’s sake, Fergal, say something. Anything.

  'Yeah, no, er, yeah, it is, yeah.' But before he could think of anything else to say and inwardly chide himself for his inarticulate grunting, Imogen was being kissed and hugged by a goddess who had just entered the pub. Imogen was pretty, beautiful even, certainly enough to make Fergal’s speech faculties go into a tailspin, but the woman who was hugging her and saying, 'How was it?' seemed to radiate her own light source. Fergal’s perception s
lipped into needle-sharp focus. All other sensory input – the voices in the pub, the music on the juke box, even the taste of the Guinness – faded into the background. In Fergal’s world, there was just the sight of Imogen and the goddess, hugging, their two lithe nubile bodies pressed against each other.

  Managing to drag his gaze away from the two women hugging, he looked around at the others in the group standing at the bar. Surely, he couldn’t be the only one who was being beguiled by this vision. Standing next to him was Rob Douglas, the star salesman at Trenchart Colville, the graduate trainees’ mentor, the man whose speech earlier he had so nearly interrupted with his untoward bowel movement. He was a man, he had man’s feelings, impulses, could he not see what was going on? Was he not quaking in the shadow of the same oncoming tsunami of lust that Fergal was? Fergal’s eyes locked onto Rob’s. The helpless pleading expression on his face was something that he couldn’t mask; and he couldn’t be certain how loud his words would come out due to the severe impairment of his motor functions. Luckily, they came out at the hoped for level of a whisper.

  'Have you seen that?' Fergal nodded in the direction of Imogen and the goddess. But Rob seemed totally impervious to the activity taking place right there in front of them. He even managed to smile – and there was a nonchalance, a knowingness to the smile that bewildered Fergal even further.

  'Fergal,' said Rob, his voice maintaining a calm measured tone that Fergal couldn’t have emulated even if his life depended on it. 'This is Georgina, George.' He was gesturing to the goddess, moving towards her, invading her radiance as he slipped his arm around her. 'She’s my girlfriend. And Imogen’s sister.'

  Georgina held out her delicate manicured hand to Fergal who took it in his ungainly plate of meat and shook it while his mouth emitted a sound like that of a punctured bicycle wheel at the end of which, after a summoning up all his powers of elocution, he managed to articulate an 'erm.'

  Rob introduced George to the rest of the group and then he announced that he and Georgina and Imogen were going to go out for dinner and he would see them all again in the morning. Only after the three of them had actually left the pub did Fergal’s heart rate and basic bodily functions return to normal.

  'Did you see that?' said Fergal sidling up to Al Denham.

  'I take it you mean George?'

  'Of course. Oh my God.'

  'Well maybe you’ll have a girlfriend like that some day soon.'

  Fergal chuckled. It was a heart-warming thought but for all the likelihood of it being true, Al might as well have said that Fergal was going to skipper the first Irish moon landing.

  After Al had bought the second round of drinks, others in the group, clearly thinking about the following morning’s training sessions, were starting to make their excuses and heading off home. By the third round of drinks, there was just Al, Miles and Fergal remaining from the group of graduate trainees. Fergal insisted on buying three double Jamesons – 'for the road' – and gave one to each of them.

  'Here’s to the City of London.' Fergal clinked glasses with his two companions, handsome bastards the pair of them. Maybe the prospect of a girlfriend like Imogen or Georgina was not so outlandish for them. But it wasn’t their looks that drew Fergal to them at that moment in time. They were good guys, he could feel it. He had always been a good judge of character, could tell straight off the bat whether someone was going to end up as a friend or an associate and these two, well, they were definitely going to be friends. He could just tell. Al was more open, more game for misbehaviour, more of a potential ally in the pub. Miles was more guarded, less extrovert, but there was an endearing vulnerability to him as well. At some time – and Fergal had no idea of when – Miles had felt a deep sadness. It was something he hid but Fergal could feel it.

  A great looking girl walked past and Fergal found his eyes following her, locked onto the target, no attempt at discretion, no gently swivelling gaze but a full head, shoulder and hip turn that a golf professional would have been proud of. Fergal heard a bark of laughter and turned to his two companions, both of them laughing together.

  As they threw back the Jamesons and Fergal enjoyed that reassuring warmth in his stomach, he felt a sense of brotherhood with his two fellow trainees. He had felt it the moment they had stepped out of the lift that morning. The three of them would be friends – whether lifelong or whether just for the duration of the graduate training scheme at Trenchart Colville was impossible to gauge – but they would be friends, of that he was certain. Miles and Al both had a look in their eyes. They might not know exactly what they wanted to do with their lives – Christ he didn’t have a clue what he wanted to do with his if truth be told – but wherever it was they were headed, one thing was for certain, they were going all the way.

  3 Training to Trade

  USD/JPY: 99.6

  For Miles Ratner, the six weeks he had spent on the graduate training programme at Trenchart Colville felt like the longest six weeks of his life. The first four weeks were particularly tortuous. A supremely dull external trainer had taught them economics. Miles felt he could have done a better job himself, particularly given his graduation summa cum laude from Harvard in that very subject. The accountancy training was by far the worst part of the whole thing, followed closely by the basics of corporate finance and corporate and regulatory law. As well as providing the trainees with supposedly essential background information, the training syllabus was also preparation for the SFA (Securities and Futures Authority) exams that they would all sit in the new year, something that all 'client-facing' staff were required to take. Laughing Bollocks, the HR guy, had told them – by way of scaring them into working hard – that if they failed it more than three times then they would be out. No SFA license, no job. So long.

  Things had begun to look up in the past week with subjects that Miles found more interesting: financial mathematics, the concept of the time value of money and the efficient market frontier. Soon they would be into the pricing of securities, then FX, bonds and derivatives, all subjects that Miles knew inside and out already. He could have done without the basics of distribution and selling to clients. Why would he want to waste his talents learning how to help others make money?

  Throughout the six weeks of the programme, during those numerous moments when Miles couldn’t help but allow his mind to drift, he found himself thinking of the man who was responsible for his advanced knowledge and superior understanding – his grandfather.

  Miles relished the memory of those times as a boy when he had sat with his grandfather on a Saturday morning in his office on the corner of William Street and Broadway in Lower Manhattan and listened to the old man explaining – in a far more erudite and illustrative way than the succession of trainers and mentors had at Trenchart Colville – the nuts and bolts of the global financial industry. They were some of the happiest times of his life, getting off the subway at Wall Street and walking up Broadway. He truly felt as though he was in the epicentre of the world. And he loved the way that Grandpa spoke to him like an adult, even when he was only nine or ten. It made him feel as though he had entered the world of men. Something that his father had never made him feel. What Grandpa had taught him on those Saturday mornings had stayed with him all his life. He was only meant to be there to help out in the office with the most basic of clerical and administrative duties by way of a Saturday job for which he earned a few bucks pocket money. But recognising young Miles’s interest in finance and taking his ambitions to make a career in that industry seriously, his grandfather had taught him well. When the old man had died – what was it? – five years ago now, Miles had cried for two solid days. But as he was being laid to rest in the Salem Fields cemetery in Brooklyn, Miles had promised him that he would become the man that his father – Grandpa’s failure of a son – could never hope to be.

  As far as Fergal Quinn was concerned, the graduate training programme was far too much like hard work. When he had set out on his odyssey in the City of London, it had
never occurred to him that there was so much mathematics involved in banking. If it hadn’t been for Miles he would have been completely stuffed. The post-training day debrief session in the Golden Hind had become a standard part of the programme and after three pints of Guinness and Miles’s calm reasoned explanations, everything had made much more sense. The four of them – Fergal, Miles, Al and Imogen – had become friends, a hardcore nucleus of after-hours research although Fergal was beginning to get the feeling that Al’s and Imogen’s interest in the after hours workshops had less to do with clarifying various grey areas arising from the day’s training sessions and more to do with spending as much time as possible in each other’s company. Al Denham was a lucky bastard having someone like Imogen so keen to spend time in his company. At least Fergal had managed to overcome his inability to speak coherently in her presence. As for her insanely attractive sister, George, who joined them from time to time in the Golden Hind, that was another matter entirely.

  It had been a strange six weeks. It felt like being back at school sitting in classrooms listening to teachers. And yet it was also completely different too. This wasn’t information that was provided for them to do with as they wished. At school, you had the option, you could choose to learn or you could choose not to. Here, you were expected to learn, not only for your own benefit, but for the benefit of the bank. Fergal felt as though he was part of a machine, a tiny bolt in the whole thundering engine and so far at least, the experience fascinated him.

  The reason that he was so poor at mathematics was probably down to his love of literature. At school, he had put so much more time into reading the classics – and the not so classic sometimes – and had allowed his other studies to suffer accordingly. But he had still achieved his dream of winning a place at Trinity College to study English literature. And it was there that he had started to write. It wasn’t anything much at first, but the number of notebooks increased as he succumbed to the urge to chronicle moments in his life. In the past six weeks, he had written only a few pages of thoughts and musings on the nature of this new world – he just hadn’t had the time to write more – but he felt with unwavering certainty that all of this was going to find its way into the book, or hopefully books, that he would write some time in the future. He still had no clear idea of what form his writing would take. It might be memoirs, it might be fiction, but whatever it was, he knew that his ongoing personal experiences represented invaluable raw material.