November 5, 2017
“Excess was everywhere in the heady days before the financial crisis. Similar to UBS, BNP had started out back in 1848 as a run-of-the-mill French lender, but by now it had become a continent-leaping colossus”
November 5, 2017
“Hayes had been in Tokyo a rough couple of months. There was, of course, the lingering ugliness surrounding his trading in his final weeks at the Royal Bank of Canada, but it seemed like nearly everything else had been a mess, too. After he had spent a few days working in UBS’s office, the human resources department got around to collecting his documentation and realised he didn’t have a work visa, only a tourist one. It therefore was illegal for him to be working in Japan. Hayes was ordered by a distressed HR officer to immediately leave for Seoul, South Korea, and to stay there until his Japanese visa came through. The mix-up didn’t inspire much confidence in UBS.”
November 5, 2017
“The Team America puppets depicting Middle Eastern terrorists used the phrase “Derka derka Muhammad jihad” instead of speaking actual Arabic. Alykulov wasn’t an Arab, and Kazakhstan isn’t in the Middle East. No matter. “Haha, that’s great,” Pieri said when he learned of his subordinate’s nickname.”
November 5, 2017
“ Hayes organised his bets around derivatives that would deliver profits if, at a specific date, the difference between two interest rates—say, those in the United States and those in Japan—narrowed or widened by very precise margins”
November 5, 2017
“Hayes’s team was on a floor that also included specialists in trading currencies, commodities, and bonds. The entire group would go out for beer-and-bowling nights three or four times a year at the Tokyo Dome Bowling Center, next door to the indoor stadium where the Yomiuri Giants baseball team played. These were among the few work events that Hayes genuinely enjoyed.”
November 5, 2017
“ Long before Hayes arrived in Tokyo, the submitters and the traders had realised they could help each other out. It had been common practice at UBS for traders to ask their deskmates to nudge Tibor in helpful directions, and to ring colleagues in other parts of the UBS empire for help moving Libor. Those colleagues didn’t have to comply—they could have reported something resembling the bank’s actual borrowing costs—but who wanted to be the martyr, the goody two-shoes, who interfered with traders raking in profits for the bank?”
November 5, 2017
“One afternoon that September, Hayes was chatting electronically with a Tokyo broker named David Perfect.”
November 5, 2017
“It’s “very, very hard to price stuff with the fixes”—trader shorthand for benchmarks like Libor—“being so manipulated and inconsistent,” he complained.
“The fixes are manipulated?” Perfect deadpanned.
“Yes, of course they are,” Hayes said, not picking up the sarcasm.
“Kidding,” Perfect clarified.”
November 5, 2017
“And so on his first day of trading, as Hayes chatted with Terry Farr, he threw in a casual aside: “Do me a favour today and get Libors right up.”fn2
“I’ll do what I can,” Farr responded”
November 5, 2017
“Around 7 A.M., he sent out an e-mail called a “run-through” to a slew of bank traders. The dispatch contained a simple spreadsheet—basically just a box of numbers—pasted into the body of the message. It listed where every tenor—the technical term for time periodfn3—of yen Libor had stood the past day or two and where Goodman expected it to end up that day. He called that last figure “Suggested Libors.” Each morning, he prefaced the data with the same simple note: “GOOD MORNING YEN RUN THRU.”
November 5, 2017
“Relying on the run-throughs represented an enticing shortcut. And because of the inherent subjectivity of the Libor estimates, nobody was likely to notice.”
November 5, 2017
“Once, when Goodman’s run-through contained a typo, suggesting six-month Libor at 1.10 instead of 1.01, Read noticed that Citigroup and WestLB copied it, even though it represented a huge leap from the previous day’s level. When Goodman corrected it the next day, the banks again followed suit. In other words, the laziness of a few bank employees—“sheep,” as Read sometimes called them—meant that ICAP’s run-throughs had a startling amount of real power. ”
November 5, 2017
“Indian food being the preferred takeout option among London’s traders and brokers”
November 5, 2017
“Over the next two years, Hayes—or Alykulov, who had eagerly accepted a job as Hayes’s deputy, hoping some of his brilliance would rub off on him—would ping Darin on hundreds of occasions asking him to move UBS’s Libor data in helpful ways. Darin often complied. Neither he nor Alykulov thought much of the requests, partly because it was so clearly common practice on the bank’s trading floors.”
November 5, 2017
“The exchange reflected an important dynamic: There were limits to the extent that traders would tinker with Libor. You could move Libor within a certain plausible band to help yourself, but straying outside that range was at best unwise. Did that principle stem from a sense of propriety, a notion that while the definition of Libor was a bit amorphous, the submissions needed to have at least some integrity? Or was it simply that traders wanted to avoid detection as they rigged a vital interest rate? Years later, that question would be hotly contested.”
November 5, 2017
“Hayes’s life revolved around his job. He typically arrived at work around 8 A.M. and stayed till at least 7 P.M. He came in when he was sick. He rarely ate lunch. An assistant fetched him afternoon tea.”
November 5, 2017
“hough Hayes was obsessed, he was hardly miserable. For the first time in his life, he was popular with women. The fact that he was a well-paid rising star probably didn’t hurt. But he also felt more relaxed talking to Japanese women (those who spoke English, that is) than he did Western ones because he didn’t find the former to be physically attractive. Japanese women took an immediate liking to him, apparently because he seemed nonpredatory and sweet compared to some of his peers.fn6 One woman at UBS found his quirky personality adorable and bought him a pair of panda dolls. Propped up on his desk, they became his lucky pandas.”
Notes From: David Enrich. “The Spider Network.” iBooks.
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