Shadow Banking

by C. M. Albright

  Al rubbed his hands against his trousers and looked around the trading room. Loud raucous laughter came from some traders that he couldn’t even see but knew they were out there somewhere behind the hedges of computer screens and wiring. It had taken a while to get used to the background noise of this strange working environment but he knew that he would never feel at home here until he managed to do his first trade. Al knew that he couldn’t move on in his life until the deed was done. And sitting there, trying desperately not to look nervous, he knew that it was to come soon. He couldn’t help the feeling of being watched, just as he had been watched – they all had – on the various desks that they had rotated around over the previous weeks, doing admin, booking trades into systems, liaising with the back office, checking credit lines. But with the SFA licenses having been confirmed the day before, the time to stop watching and start doing was fast approaching.

  Rhys was on the FX sales desk for a spell while Imogen was next to Rob on the interest rates sales desk, observing him speaking to investors and smaller banks. Fergal was on the spot desk having received a lifetime ban from the rates desk due to his being held responsible for giving one of the traders a hangover so bad he had to be hospitalised. It wasn’t Fergal’s fault – after all, they had challenged him to a drinking game of Par-100. It was widely felt that Fergal would stay in FX. Miles and Eve were both on the currency options trading desk, widely regarded throughout the bank as a big potential money spinner.

  Al could feel the electricity in the room. It was the first Friday in March and so heralded the release of the US employment report which was always a market-moving event. He had never felt so conscious of his own lack of experience. Rob was working the phone; the markets were moving and the dealer board phone system looked like a Christmas tree with all its flashing lights.

  'Pick up on twelve, Al,' said Rob and Al felt a jolt of adrenalin, his index finger hovering over the flashing button.

  'No bloody Flymos,' said someone nearby which Al knew was an admonishment not to hover over a line you don’t want to pick up. Al took the call.

  'Hey Rob, its Stew at Opale. I’m 98 bid five year Marks in a ton.' Al could feel his pulse accelerate as he shouted this out.

  'Give him!' shouted Bad Bill, a notoriously volatile and sometimes scary Deutschemark swaps trader. Al felt his guts lurch. He looked around to Rob for reassurance that he should trade. Rob’s eyes met his.

  'Tell him: “That’s done”.'

  'That’s done,' mimicked Al down the phone.

  'OK mate, swap details outside. Who is this by the way?'

  'It’s Al.'

  'Cheers Al, ask Rob to call me when he’s free.'

  The line went dead.

  'Well done mate,' said Rob, shaking his hand. Rob turned to Jen next to him and said, 'Jen, can you help Al with all the details and just walk him through everything.' As Al slumped back in his chair, a heavy hand clapped down on his shoulder. Al turned to see the smiling face of Big Ted, the gargantuan head of rates trading. Part of him felt an acute sense of anti-climax that all the work and worry of the past few months should culminate in this, two words down a telephone line, merely acting as a mouthpiece for someone else’s decision-making higher up the food chain; and part of him felt a flood of relief. He had carved his first notch, he had achieved. He belonged.

  In an attempt to perpetuate their increasingly badly kept secret, Al and Imogen had taken to meeting up in a little sandwich bar called Ronaldo’s, it being well and truly off the beaten track as far as Trenchart Colville employees were concerned.

  'Nice one, Al,' said Imogen when he told her his news and she kissed him on the lips.

  'It didn’t really feel as though I’d done anything and then Rob shook my hand and even Ted came around. It was kind of weird really.'

  'Well at least you’ve got off the mark.'

  'Don’t worry, it’ll be your turn next.'

  Al gave Imogen’s hand a reassuring squeeze. He knew she was finding the environment difficult. It had become something of a problem during their fledgling relationship. Al was enjoying the experience, enjoying the challenge while Imogen was struggling to fit in and her frustration was becoming all too obvious of late. She was determined to prove to herself and her family that she was just as much of a success as her sister, Georgina.

  'Yeah, maybe things will seem better once I’ve started getting a few trades under my belt.' Al watched her as she looked out of the window at the City workers going past outside and he felt troubled, not about her aptitude for the work but for her emotional resilience amidst the aggression and the craziness, something that was brought into sharp relief that afternoon on their return to the office.

  Rob’s exasperated voice cut through the background hubbub as he asked Imogen: 'I thought you bought the FRA?' Al could just make out Imogen’s voice as she said, 'I thought I did.' It was clear that Rob was trying to keep calm but there was an edge to his voice as he asked, 'Imogen, who’s done what?'

  Al listened as Imogen became flustered and confused. 'He must have misunderstood me because that’s not what I said.' Al felt helpless, knowing that he couldn’t intercede. He stood up and looked across at Imogen who stared at Rob, unblinking.

  Rob punched the line: 'Phil it’s Rob. What do you think you’ve done on this FRA? You’ve bought the FRA. You’ve paid us. Look, Phil, we have a dispute here and I’m gonna have to listen to the tapes but it doesn’t sound like you’ve helped me out like I asked you to. I specifically told you she’s the new graduate on the desk.'Imogen seemed to deflate in her chair, traumatised, as Jen, overhearing the conversation hurried across the room to ready the tapes. Rob put the phone down and said, 'What a knob-end,' as he turned to Imogen. 'We’ve got to tell the desk we’ve dealt backwards.' Al could see that Rob was about to ask Imogen to make the call. Rob wasn’t looking at her but Al was. She was on the brink.

  'So what you’ve got to do,' said Rob turning to Imogen. 'You’ve got to speak to the ...' Rob stopped as he looked at Imogen; by now he could see what Al could see. Imogen was in no fit state to call for a cab let alone extricate the bank from the god awful mess that she had managed to engineer. She stared at him with big watery eyes that didn’t dare blink. 'Tell you what, Imo,' said Rob, 'I’ll step in here.' Imogen was left sitting in her chair looking as though the walls were closing in on her. At any moment the surface tension of her tears would rupture and that would not look good. Al couldn’t look. It was like watching a car crash. He sat and stared at the screens.

  Rob, however, had to honour the trade and the very public nature of their environment meant that Imogen was on display in her very own crucible of humiliation. Rob approached Bob’s desk calling out to him as he did so to ensure that on his arrival he had Bob’s undivided attention.

  'We’ve got a problem,' said Rob. 'We’ve dealt backwards. The client thinks he’s bought the FRA. Have you hedged it?'

  'I bought a strip of red futures,' said Bob.

  'Bob, we need to reverse the hedge, we’ve been paid for the FRA.'

  'Rob, this strip’s five ticks lower and I’ve got to sell fucking double. We’re a hundred grand off side on this fucker.'

  Rob looked at Bob: 'Sorry mate, we’ve sold the FRA. Just let me know what the damage is.'

  Shaking his head, Bob clicked into a line: 'Cue ball, where’s red June?' Bob listened then came straight back with, 'Seventy-eight offered, a thousand lots. Let me know how it trades, yeah?' Bob clicked the release button on the phone and dropped the handset onto the desk.

  Al watched Rob walk back to his desk as Imogen sat, head bowed, her unseeing eyes staring at the screens. Bob’s voice broke the calm: 'I think it’s going to be eighty-five grand, Rob, this isn’t fucking Playschool.' Bob’s eyes narrowed. 'Has the client been straight with us on this?'

  Al listened as Rob paused to think. If he cleared the client then he would throw Imogen beneath the bus but if he blamed the client, the traders would never forget it and would be
on a mission to get that money back many times over.

  'I’m not sure, I’ve got to listen to the tapes.' He looked Bob straight in the eyes. 'Let me check it out and get back to you.'

  'Ted knows and he’s going to talk to JJ,' said Bob. 'We can’t have this again.'

  Al could hear a sharpness enter Rob’s voice as he said, 'OK, all right, simmer down, you’ve made your point. I’ll talk to JJ too.'

  The hubbub of the trading floor closed over Bob and Rob’s conversation but Al knew that its contents would continue to reverberate in Imogen’s head.

  After leaving the office, Al and Imogen both told the others who were on their way to the Golden Hind that they had prior engagements and met up in a pub down by the river in Blackfriars. Imogen had managed to maintain her composure until she felt the effects of her second large glass of wine and resting her head on his shoulder, Al looked down to see that her cheeks were streaked with tears.

  'He stitched me up, I know he did,' she said. 'I knew Rob had had a word with him and probably told him to go easy on me – something that I’m not exactly happy about – so this guy obviously decides he’s going to ignore that.'

  Al didn’t know what to say. He suspected that Imogen’s refusal to accept responsibility for her mistake was born of stubbornness. But he also accepted that he would probably have felt the same in her situation.

  'You seem to thrive in that environment,' she said. 'But it just feels so alien to me.'

  'I was shitting myself this morning when I did that trade,' said Al. 'I didn’t exactly feel at home. What happened to you this afternoon could just as easily have happened to me this morning. It’s just the luck of the draw.' Even as he said it, he knew it was a hollow reassurance and he could tell from her expression that she didn’t believe it either.

  What he said next was something that he had thought long and hard about over the past few weeks but had never vocalised, never seeming to find the right moment. But here with Imogen dabbing at her tears after her disastrous first trade, it just felt right. 'Do you really want to be in the City? Are you sure it’s right for you?'

  'What do you mean?' she snapped.

  Al pressed on even though he knew he was in dangerous territory: 'Are you sure you’re not doing this just to compete with George?'

  Imogen looked at him. Her expression demanded an explanation.

  'Well, it just seems that you’re both very different people and you know, I’ve seen it before, brothers and sisters compete with each other sometimes. That’s the way it is. George is clearly very much at home in this world and I sense that you’re struggling to feel that way.'

  Imogen didn’t speak, just stared at him. Al broke eye contact first and looked down.

  'I’m sorry. I’m just being honest with you, that’s all. It just seems to me that you’re not very happy at the moment. And I want you to be happy.' Al and Imogen had been together for a couple of months now. They spent most weekends together. The sex was great but more than that, Al felt as though he was falling in love with her. He hadn’t felt like this since first meeting Sam at Durham. But neither of them had said, 'I love you.' Even in the heat of passion, it had just not felt right. Al knew that Imogen was more than just an office romance; he didn’t want to do anything that might jeopardise their possible future together, least of all by becoming too serious too soon. But now felt like the right time. He had clearly wounded her by what he had said and he wanted her to know the depth of his feelings. If ever there was going to be a right time, it was now. Taking Imogen’s hand, he squeezed it and as she looked up at him, he smiled.

  'Look Imogen, I didn’t mean to upset you. I’m just being honest. You know I love you.'

  And there it was. It hung in the air. A fat bloke in a wide pin-stripe roared with laughter on a nearby table. Someone playing the fruit machine muttered 'bollocks' as he lost some money and the machine emitted an electronic whoop as though mocking his failure. Imogen continued to stare at Al. What would she say? Al felt vulnerable. He squeezed her hand again but she snatched it away.

  'Fuck you.'

  She picked up her bag from the table, stood up and made for the door. Al went after her; he caught up with her as she reached the pavement. He put his hands on her shoulders and spun her around.

  'What the hell’s the matter?'

  Imogen looked up at him with a defiant expression. Conciliation was not an option; all he could hope for now was damage limitation.

  'How dare you say that to me? How dare you.'

  'Why? I don’t get it. What’s wrong?'

  'First you insult me and then by way of an apology – not because you mean it or feel it – you say that, just to worm your way back ...'

  'I do mean it.'

  'Can’t you see how important this is to me? Can’t you see how seriously I’m taking all this? I’ve had one of the worst days of my life. I’m upset, I’m hurt and all you can do is make some dumb comment that the only reason that I’m doing all this is out of some stupid sense of competition with George. Well, screw you.'

  Imogen went to turn away but Al held her close. 'Imogen, I’m sorry, OK? I didn’t mean to hurt you. I know how much this means to you.'

  'No you don’t or you wouldn’t have said what you said.'

  'I’m sorry.'

  'I’m just as good as George, better given half a chance – which let’s face it I’m not given most of the time.'

  This was family politics, the nature and history of which Al had no conception and while the reality of what he had suggested was being proved with every word that Imogen uttered, there was no way that he could plot a course through the minefield of a family’s internal power struggles without getting his legs blown off. Retreat was clearly the best course of action.

  'Imogen, let’s just forget I said it. I don’t know what I’m talking about.'

  'Too right you bloody don’t.'

  'Come here.'

  But when he tried to pull her close into a hug, she pulled back.

  'Look, I’ve had the day from hell. I just want to go home, have a bath and go to bed. Alone.'

  She kissed him on the cheek; it wasn’t even a peck, her lips barely touched his skin.

  'I’ll see you in the morning.'

  'I’ll walk you to the tube.'

  'No, it’s OK, I just want to be on my own.'

  Al was left standing on the pavement watching Imogen walk away and merge with the pack of commuters. He sighed and looked up into the night sky in which a distant passenger jet was losing altitude, its landing lights blinking. Al turned around and went back into the pub for another drink.

  Nikkei: 17990

  Fergal liked the spot desk. He felt at home there, enjoyed the banter, the noise, the aggressive lunchtime drinking. His desk consisted of four screens, two keyboards and the ubiquitous phone board on which incoming lines didn’t ring but flashed violently. His job so far had involved confirming details of trades on Reuters, the interbank message system that occupied a permanent window on one of the four screens in front of him. In the past couple of weeks, Keith had allowed Fergal to trade his positions, deal with the brokers and had asked Fergal’s opinion on every price he made. Fergal loved having Keith’s undivided attention. He realised he was getting the best training possible. He was now part of the co-ordinated desk’s call out to other banks, splitting large trades into smaller portions to clear their risk across a large number of counterparts, hopefully at a better average price than the original big ticket.

  On his dealer board, there were two large speakers out of which brokers shouted a constant stream of information punctuated by the ever-present rhythm of profanity. A few weeks previously, he had found the aggression implicit in this vocal barrage intimidating but he had got used to it – had got shit-faced in various venues with the owners of those formerly disembodied voices – and now as he grew to understand the terminology and content of the ranting, he had found it strangely reassuring. Fergal loved the brokers. They didn’t p
ossess a university degree between them and yet their wit was the sharpest he had ever encountered. The savage banter, the nick-names, the relentless optimism – he couldn’t get enough – and they loved him too. Keith had told him, 'They need to like you and fear you at the same time. If they like you, they’ll look after you and if they fear you too, they’ll never take liberties.'

  As he sat there on that Friday morning, listening to the voices, Fergal felt hungry to get more involved, to start managing his own risk, however tiny. He wanted to make his own decisions rather than just doing what Keith told him to do.

  On the other side of the spot desk, Keith shifted his sixteen stone bulk out of his chair, pulled on his jacket and looked across at Fergal.

  'Fergal, I’m out for lunch now. Shan’t be long. You’re goin’ to watch my position, yeah? I’m long ten dollar yen at 105.70. It’s at 80/83 at the moment and the stop is at 60. If it gets above 20, raise the stop up to my entry point. Use your judgement on the top side. If you think it’s done enough then just get me out.'

  'Sure thing, Keith. Worry not. I’ve got it all under control.'

  'Excellent Fergal. You can come down for a few once I’m back.'

  'Have a good one, Keith.'

  'Oh, I will, Ferg, don’t you worry about that.'

  And with that, Keith was heading out of the door leaving Fergal staring at the figures on the screen. His cheery bonhomie hid a tension and fear that was only exacerbated as other bodies made their way out of the door for a couple of Friday lunchtime sharpeners. The trading floor felt empty and bereft of its usual chatter. Even the voices from the brokers coming down the wire were subdued. It was the first Friday in the month and the US employment report was due at 1.30 London time. The non-Farm payroll data was the most crucial data release every month in terms of altering the market’s perception of US interest rate policy. As always, there was a sense of calm before the storm.