The Pained Trader: Four horsemen of the apocalypse

The Pained Trader takes an MD on tour.

  • By The Pained Trader
  • 05 Jul 2018
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Here they come, the four horsemen of the stockbroking apocalypse, kicking up a storm as they gallop full pelt across the horizon of bruised clouds towards us: Compliance, Technology, MiFID and Summer, harbingers all of the Last Judgment in which I for one, but many of us, will be found wanting.

There is no need to go looking in the Book of Revelation for this, though, as the eventual outcome is anything but revelatory: there shall be another winnowing.

I had a management colleague, a recent and by all accounts big-hitting, expensive hire, visiting from out of town and nothing could be more straightforward than his request that I set up some meetings for him with what I hyperbolise as my client base.

He had a rigorous schedule of his own but thoughtfully tagged a day on to his trip so he might better understand what my punters value, what they thought of our product offering and how we might develop the relationship for our future, mutual benefit. He was free from breakfast through to dinner.

I cast a doubtful eye across the Post-It sticker affixed to my screen that serves as a client database, a client relationship management system, a client call list and a constant reminder of whom I’m not trading with and panicked.

My daily interaction with the seven people on it can be condensed into fewer than 10 minutes in aggregate, if we include time spent on hold, and now I was being asked to coordinate a sales-trading roadshow with nothing to peddle except myself and as everyone in these ‘ere parts knows, that is not much. My customers can engage with me whenever they like and choose not to, so the chances of filling a programme with coffees, swing-bys and pop-ins were remote.

I called in a few favours and managed a grand total of four meetings on the understanding that they really were doing me a good turn, that each encounter was to be as brief as civility would allow and under no circumstances was I to threaten self-defenestration or fall on my knees, hold on to their legs and beg, please, anything just for a Large Unsolicited Discretionary Order.

Now I didn’t start the day off by covering myself in glory because I’d been out on the hit-and-miss in a big way the night before at a summer garden party which coincided with the World Cup match and then batted on for the Pall Mall after-party with all the recklessness of a man whose career is in freefall and has nothing left to lose. I was drunk enough to be seen dancing uninhibitedly around 1.30am and so when the visiting MD showed up at reception at 8am, asking for me, not only was I not in the office but I hadn’t even progressed to the public transport, I’m-on-my-way-in schtick yet. He spent quarter of an hour in the atrium downstairs trying to gain access to the building.

We met, my discomfort and physical distress immediately apparent, and shook hands awkwardly. I’m not one for phatic communion at the best of times and this was down there among the worst. (In fact, I have found the biggest challenge of new pet ownership over the last month to be not the detailed and laborious removal of canine faeces from Turkish rugs but the phenomenon — for me at least – of having to engage in polite but meaningless chit-chat with other dog-walkers.)

The handshake and greeting were understandably defensive and cagey on my behalf, and once again, I found myself in the familiar situation of meeting someone for the first time and spending most of the encounter either apologising or detailing how awful I felt.

One meeting was cancelled while another was abbreviated to the point of an exchange of business cards without us getting over the threshold of their office. The two remaining appointments were notable for the unrelenting, almost Hardyesque narrative of pessimism which the buy siders managed to convey to the sell siders.

First, the clients prefaced everything they said with the old “we’re very quiet at the moment” routine, blaming summer for their inactivity as if stocks stopped trading or it was a strange phenomenon.

Then they moved swiftly on to MiFID and its best execution policy (whatever that is), which means that no matter how warm relations are between two firms or between the broker and the client, no matter how well-judged your research product or salivating your deal pipeline or lavish your corporate entertainment, it will not help you garner a solitary order.

Both buy siders kept referring to this thing called natural, which is where you have a genuine buyer or a seller apparently, not just the pretence of one to fish for business. As someone for whom everything in this industry seems unnatural, I can only hope this does not catch on.

“The odd working order for a mate? Titbits every now and then?” I asked. “Compliance are all over us.” That at least I did believe.

It also became clear during these discussions that even natural was of secondary appeal to the buy sider as they would prefer to do everything down the pipes which obviates the tedium of conversation with a sales-trader (and listening to his excuses) and where their costs are almost zero — and so are broker revenues.

If you receive an order down your pipes, often you can’t even feel it. Trying to do high-touch/soft-touch stockbroking and get rewarded for idea generation is like fly-fishing patiently with some extremely rare and expensive bait to catch a little silver trout and then a bloke beside you lobs two sticks of dynamite into the river and then just scoops nets full of detonated fish from the surface of the water.

One confessed DMA was pretty much wired into his DNA, he would only approach a sales-trader if he desperately needed to deal in something illiquid. You know, real last resort stuff.

If he could not find what he wanted in the market using this extreme tactic then he would call someone and demand capital commitment. This involves compelling an investment bank to give you the position you want which costs them a fortune and then you promise to repay them with order flow which everyone knows will never be forthcoming.

The out-of-town MD politely nodded a lot as if this were news to him and made copious notes but in truth, there was nothing here we didn’t already know.

You should never ask questions if you won’t like the answers, I suppose. It was so depressing that in the end I was relieved I didn’t have more clients. If they are all like that, seven is quite enough.

  • By The Pained Trader
  • 05 Jul 2018

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 58,137.72 186 8.23%
2 JPMorgan 57,032.77 202 8.08%
3 Barclays 49,551.65 159 7.02%
4 Bank of America Merrill Lynch 42,095.04 147 5.96%
5 Deutsche Bank 38,217.89 137 5.41%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Bank of America Merrill Lynch 6,045.16 4 18.58%
2 BNP Paribas 1,742.18 7 5.36%
3 Credit Agricole CIB 1,539.94 8 4.73%
4 MUFG 1,257.24 4 3.87%
5 SG Corporate & Investment Banking 1,165.08 6 3.58%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 UBS 998.25 3 13.49%
2 Citi 693.55 2 9.37%
3 Morgan Stanley 572.72 3 7.74%
4 Bank of America Merrill Lynch 509.34 3 6.88%
5 Jefferies LLC 409.89 4 5.54%