The market maker

by Ridpath, Michael

  24 Michael Ridpath

  ''Did you understand all that?" asked Jamie when it was over.

  "Some of it. I have a lot of questions. There's a lot to learn."

  "Like how to stare at Isabel and stop your mouth from dropping open at the same time," said Jamie.

  "Was it that obvious?"

  "Don't worry, we've all done it. You get used to her after a while."

  "There's something about her. I don't know what

  is.

  "She's as sexy as hell, that's what it is. But I wouldn't make it too obvious. She bites."

  "Really? She looks friendly enough to me."

  "Well, don't touch. Don't even look. Trust me."

  I shrugged, and sat at Jamie's desk. I had never seen a fully equipped dealing desk before, and Dekker's were state-of-the-art. Jamie explained it all to me. There were five screens, which provided news, prices, and analysis in a range of different colors. Jamie seemed to have an unpleasant predilection for pink. To add to the clutter was a phone board with thirty lines, a fan, a Spanish-English dictionary, two volumes of the Bankers' Almanac, and a small silver rugby ball commemorating an Argentine sevens tournament. The whole was framed in a collage of yellow Post-it stickers and topped with a haphazard scattering of paper.

  "OK, let me tell you the basics," said Jamie, after he had shown me how to get the rugby commentary up on the Bloomberg information service. "All the guys on this half of the square"—he gestured with his arm— "are salespeople. Our job is to talk to customers, give them information, find out what they want to do, and then buy and sell bonds from them. These people"— he pointed to the other half of the square of dealing

  desks—"are the traders. They make markets in hundreds of different bonds. So when one of our customers want to buy or sell something, we ask one of the traders for a price. He gives us a bid and offer. We reflect that to the customer, who will either sell at the bid price or buy at the offer price. In theory, the bid/offer spread should be profit for us."

  I nodded. So far, so clear.

  "The other way we make money is through new issues. See those people there?" He pointed to some of the desks outside the square. I noticed that Isabel was at one of them, reading through a sheaf of documents. Jamie followed my eyes and coughed. "Of course you do. They're known as Capital Markets. Their job is to talk to potential borrowers and put together a bond issue that raises money for them at the lowest rate. Which by the way is usually pretty high. Investors aren't going to take on the risk that one of these countries defaults again without demanding a decent return."

  Jamie spent the next couple of hours explaining how Dekker functioned. I listened closely, turning over each new piece of information in my mind, seeing how it fit in with what I had heard before.

  I listened in to his calls as he spoke to his customers. These turned out to be a wide range of different types of institutions: a small French bank, a British merchant bank, a Dutch insurance company, an American hedge fund.

  He talked about Venezuela and the IMF negotiations. He exchanged rumors on a future Mexican deal. He talked about soccer and what was on television the night before. He bought and sold millions of dollars of bonds, always selling at a price slightly higher than he was buying. Many of these trades were recorded as "DT" and then a number. Jamie explained that these

  were numbered accounts at the firm's Dekker Trust affiliate in the Cayman Islands.

  Lunch was an exotic goat's cheese and salad sandwich, and a Coke brought around by a kid in overalls carrying a big tray. There was no need to leave the desk. No time, either.

  Conversations moved with the time zones, picking up Brazil late morning, the rest of the continent and New York in the afternoon, California in the evening. In fact, the pace quickened as the day wore on; many of the other players in the market operated out of New York or Miami. Our day lengthened to incorporate theirs. Much of this was in Spanish, and I couldn't understand it. I could see I would have to learn Spanish.

  At six o'clock 1 went to see Charlotte and her team in Research, and returned to my desk with an armful of reports. The political and economic analysis was excellent. I was particularly impressed with the quick and dirty notes marked "For Internal Distribution Only." These made heavy use of informal sources: local bankers, government officials, traders in New York.

  Isabel's desk was next to mine. She seemed to be constantly busy, reading through the piles of papers next to her, tapping out notes on her computer, or going over documents on the phone in what I assumed was Portuguese. I tried not to stare, but I couldn't help my eyes drifting over toward her every now and then. Her face was half-hidden by strands of dark hair as she worked. Occasionally she would pause, bite her lower lip, and stare ahead into space. She was delectable. Even when I wasn't looking at her, I could just catch the scent of her perfume in the air or hear her voice on the phone. Concentrate!

  Once, as my eyes flicked up toward her, 1 saw her looking back at me.

  "You're enthusiastic/' she said, smiling.

  "I've got a lot to leam."

  ''It gets easier once you start actually doing it. Where did you come from? Before here?"

  "Until last week I taught Russian."

  She raised her eyebrows. "Really And what brings youtoDekker?"

  "I needed the job. And Jamie was good enough to introduce me. Why they took me on, I'm not quite sure."

  "Are you a good friend of Jamie's?"

  "Yes. Very good friends. I've known him for ten

  years."

  There the conversation ended. She turned back to her phone and picked it up. 1 wasn't sure if 1 had said something wrong.

  And then my own phone rang.

  It was the two consecutive rings of an external call. That was funny. I didn't think I had given anyone my number yet.

  I picked it up. "Dekker," I said in my best imitation of the clipped tones I had heard around me all day.

  "Can I speak with Martin Beldecos?" said a female American voice.

  I hadn't heard of him. I looked around. Nearly everyone had gone home, with the exception of Ricardo, Pedro, and Isabel. She was deeply involved in a telephone conversation of her own, and Ricardo and Pedro were too far away to ask.

  "Er, he's not here at the moment," I said. "Can I give him a message tomorrow?"

  "Yes, it's Donald Winters's assistant here, from United Bank of Canada in Nassau. I have a fax I need to send Mr. Beldecos. Can you give me his fax number?"

  "Hold on a sec," 1 said. There was a fax machine a

  few steps away. I checked the number and gave it to the ;

  woman. She thanked me and hung up. ;

  I dug out the internal telephone list and looked up j

  BELDECOS, MARTIN 6417. That was my extension! No '

  wonder the phone call came through to me. He must ;

  have been the previous occupant of my desk. i

  The fax machine behind me spluttered into life. I

  I walked over to the machine and took the single i

  sheet back to my desk. It was addressed to Martin !

  Beldecos at Dekker Ward on United Bank of Canada i

  Nassau Branch fax paper. The message was short and j

  simple. I

  Following your inquiry, we have been unable to identify ; the beneficial owner of International Trading and Trans- port (Panama). We transferred funds from their account with us to Dekker Trust's account at Chalmet et Cie's Cay- man Islands branch under the instructions of Mr. Tony Hempel, a Miami-based lawyer who is the Company Sec- j retary of International Trading and Transport.

  The fax was signed by Donald Winters, Vice President, j "Isabel?" j

  She had just put down the phone. "Yes?"

  "I've just got this fax for Martin Beldecos. Where

  does he sit?" i

  Isabel didn't answer me straightaway. She tensed, ;

  and drew in her breath.

  "He used to sit right where you are," she replie
d ^

  eventually, in a monotone.

  "He left, did he?" I could tell something was wrong '

  with Martin Beldecos's departure. " Was he fired? " I

  She shook her head. "No. No, he wasn't. He was j

  killed." !

  I stiffened in my chair. "How? " i

  "He was murdered. In Caracas. Thieves broke into his hotel room while he was asleep. He must have woken and surprised them. They knifed him."

  "Jesus! When was this?"

  "About three weeks ago."

  "Oh," I said, shivering. It was an eerie feeling to know that the last occupant of this desk, this chair, was now dead.

  I wanted to ask her more, but she seemed reluctant to talk, and I didn't want to risk saying the wrong thing.

  "OK, um, so what shall I do with this?"

  "ITl take it," she said.

  I handed her the sheet of paper. She glanced at it, paused, frowning for a few seconds, scribbled something on it, and put it in an out tray on a nearby desk. Then she shuffled the papers in front of her, stuffed some of them into a briefcase, and put on her jacket.

  "Good night," she said.

  "Good night. See you tomorrow."

  She left me alone, sitting in a dead man's chair behind a dead man's desk.

  3

  I was in the office by seven the next morning. I was glad of the bike ride. If I was going to be stuck inside all day, I would need the fresh air. Ricardo was there when I arrived. If he hadn't been wearing a different shirt, I would have sworn he had spent the night at his desk.

  I smiled at Isabel as she came in. She gave me a quick smile and a''Hi."

  I dumped my jacket over my chair, grabbed a cup of coffee, and walked over to Jamie's desk. He was chatting to Dave, the big trader from Romford.

  "Morning," said Dave. "So we didn't wipe you out on your first day?"

  "I'm still here."

  "What time did you leave last night?" asked Jamie.

  "About eleven."

  "A good first day's work. Let me guess, Ricardo was still here when you left?"

  I nodded. There was a pause as we took in our early-noming dose of caffeine.

  "I heard about Martin Beldecos," I said. "Isabel told me last night."

  "Bad news, that," said Dave. "Very bad news."

  "Isabel said he was murdered."

  ''That's right/' said Jamie. "I heard the police in Caracas have caught the men who did it."

  "That's not all I heard," said Dave, lowering his voice.

  Jamie and I looked at him expectantly.

  "Yeah, there's a rumor that it wasn't just a hotel burglary gone wrong. Miguel was down there last week. The word is it was a contract killing. One of the drug gangs."

  "A contract killing?" said Jamie in astonishment. "On Martin Beldecos? Martin Beldecos the compliance officer with the glasses and the receding hairline? What, was he trying to grab the paper-clip franchise for South America?"

  "That's what Mig said!" Dave protested defiantly. "You know he knows people down there—"

  We were interrupted by the sharp clapping of hands. "It's seven-fifteen, companerosV called Ricardo. The room was silent as we all clustered around him.

  The morning meeting made a bit more sense than it had the day before. The market was spooked on the Venezuelan news; prices were off five points. But people down there in the know held the view that the breakdown of talks with the IMF was just posturing by their aged president. This information we decided to keep to ourselves until we had taken advantage of the lower prices to quietly pick up a few Venezuelan bonds for our own books. Then we would tell the world.

  The meeting ended, and Jamie and I walked back to his desk.

  Dave's words were still on my mind. "Do you think this guy Beldecos was murdered by a contract killer?" I asked him.

  Jamie snorted. "Of course not. Dave has a vivid

  imagination. And despite the slicked back hair and the Italian suits, Miguel is just an old gossip. The poor guy was killed by hotel burglars.'' He shuddered. ''It could happen to any one of us, that's the really scary thing. Now let's get on with it."

  I wanted to ask Jamie more about Martin Beldecos, but like Isabel, he seemed reluctant to talk. And I didn't want to seem too morbid; after all, I didn't even know the guy. So I let it drop.

  The trading day began.

  There was a lot of activity that morning. I listened to the murmur of a dozen different conversations, some in English, some in Spanish, the sharp cries of people telling their colleagues to pick up their line, the regular crackle of prices from the brokers' loudspeakers on the trading desk, and of course the staccato conversation of customers on the phone. But it wasn't just the humans who made a noise, the machines did also. A range of whirs, hums, and occasional grinding clanks emanated from the different computers and screens. And underneath it all was the low, almost imperceptible murmur of the great building itself. It took concentration and practice to separate all these sounds, and to tune in and out of the frequencies as you skipped from conversation to conversation.

  Except they weren't conversations. They were information transactions. As brief as they could be while still being unambiguous.

  "Hey, Pedro! Where'd you do Argy pars to discos?"

  "Fifty-six and a half on the pars and sixty-seven and three-eighths on the discos!"

  "He says he can get a quarter away on the discos!"

  "Shit. OK, I'll give him them at a quarter."

  "You'd do ten by eleven?"

  "Yep."

  "You're done!"

  And so the bonds flew around the little square of desks, and from there to different comers of the globe: Tokyo, Zurich, Bahrain, Edinburgh, New York, Bermuda, Buenos Aires. We even did a trade with the investment bank ten floors below us. Hundreds of millions of dollars flowed in and out of Dekker Ward's accounts throughout that day. But when it was all totted up it would show that a few hundred thousand more flowed in than flowed out.

  I was beginning to understand what was going on. The skill in investing in these markets lay in assessing and comparing risk. Was Brazil riskier than Mexico? If so, how much riskier? If Mexico yielded 10.25%, should Brazil vield 11.25%? Or 11.50%? Or more? How would this relationship change in the future?

  My attention was caught by a large man in a light gray double-breasted suit who was standing by Ri-cardo's desk, going through some figures with him. I hadn't seen him before.

  "Who's that?" I asked Jamie.

  "Can't you guess?"

  I looked at him more closely. He could be the same age as Ricardo, perhaps a bit younger. But he was bulkier, with a heavier face.

  "It's not his brother, is it?"

  "Yep. Eduardo Ross."

  "Does he work at Dekker?"

  "He certainly does."

  "What does he do?"

  "Nobody knows exactly. Except Ricardo. Odd jobs, special projects, stuff Ricardo wouldn't trust with anyone else. He's responsible for Dekker Trust, for example."

  "What is this Dekker Trust?" I asked.

  "It's our sister company in the Cayman Islands. It's where we put stuff that we don't want the authorities here to see."

  "That sounds a bit dodgy."

  Jamie laughed. "It's not really. We have many clients who are quite shy. They're not criminals or anything; Ricardo's very careful not to deal with anyone who smells of organized crime or corruption. But they might be involved in legitimate offshore trading, tax avoidance, foreign currency activities, and so on. They expect us to maintain absolute confidence in their activities, and Dekker Trust allows us to do that."

  "I see," I said doubtfully. "And is this operation owned by Dekker Ward?"

  "No," said Jamie. "Or at least not a hundred percent. Chalmet the Swiss bank owns a big chunk, I think Dekker Ward does own some, and the rest is owned by the employee trusts."

  "Employee trusts?"

  "Didn't Ricardo tell you about them?"

  I shook my head. Jamie paused for a
second and then lowered his voice. "That's how you get to make real money here. Ricardo lets some of the employees invest part of their bonus in these trusts. They're run out of the Cayman Islands, or at least that's where they're booked. The management decisions are actually taken by Ricardo. Their returns are spectacular. I mean, a hundred percent a year isn't uncoimnon."

  "Whew! How does he do that?"

  "With what he knows? It's easy. He uses every trick in the book. Leverage, options, warrants, you name it."

  "Is it legal?"

  "Of course it is. But it's better if it's done offshore.

  Discreetly. We wouldn't like the regulators looking for holes, even though there aren't any/'

  "And how big are these funds?"

  "That, my friend, is the biggest secret of them all." Jamie lowered his voice to a whisper. "But I reckon they have to be more than five hundred million dollars."

  It took a moment to sink in. "And that's all owned by people in this room?"

  Jamie smiled. "Most of it. Obviously our guys in Miami and the Cayman Islands have some of it. But I would guess at least half of it is Ricardo's."

  I suddenly realized that I was surrounded by one of the richest groups of men and women in the world.

  If I stuck around, I would get some of that too.

  "Eduardo administers this?" I asked.

  "Ricardo needs someone he trusts to do that kind of thing. And he trusts Eduardo more than any of us. Oh, yes, and he's also responsible for checking out new employees."

  "What do you mean, checking out new employees?"

  "Oh, you know, looking for drugs, bad debts, gambling habits, homosexuality, socialist leanings, mental instability, criminal record."

  "You're joking!"

  "No. It's true."