The sort of hush that pricks ears
WHEN Standard Bank abruptly cancelled a chat about its high-frequency trading operations, what was it hiding? A casual cup of coffee with the bank’s Giselde Brady, the maths-and-stats genius who brought warrants to South Africa while at Deutsche Bank, had overnight become a nightmare.
She was told she was forbidden, by her contract, from speaking to the media — if she saw me at a party, she would be compelled to run in the opposite direction.
So I wrote to Standard’s corporate-level flak catchers: “I doubt I would understand enough about the system to give away any proprietary secrets. If Giselde is out of the question, is there perhaps someone else at the bank I could speak to about what I think is a truly fascinating subject?”
Which was met with a dead bat. “Thank you for the opportunity, unfortunately we are not able to assist this time around,” replied one Hayley Crane.
How daft. How embarrassing. Since this is a column and not a feature article, I did not immediately make calls to the JSE and Strate, the clearing agent that settles trades. And I did not ask other banks if they, too, ran high-frequency trading desks. (Standard’s, I was told, was unique in South Africa.) Neither did I ask the opinions of asset managers in charge of unit trusts and pension funds.
Instead, I sat and stewed. And I thought about all the high-level bull that gets hidden from the likes of you and me. Why would Standard Bank not answer innocent
Why would Standard Bank not answer innocent questions about an esoteric facility it operates?
questions about an esoteric facility it operates? But for whom? Who benefits from the quantitative-analysis illuminati brilliant enough to construct a secret facility devoted to trading programmes driven entirely by algorithms?
Is it just a platform, allowing entry to foreign hot money seeking a quick buck (quick, as in a nanosecond: offering an edge in arbitrage circles that may as well be a week?) Is the service offered solely to institutional clients, or is there perhaps a retail product in the offing — a very sexy low-risk derivative with a prohibitive margin requirement affordable to just the very rich? A unit trust, maybe?
Ach, to hell with them. I will leave it to the public-relations machinery of the major banks to sort out. In due course you may hear a pasteurised version of the truth, which I am already bored with.
There is so much cant and obfuscation placed in the way of ignorant retail investors. Those of us with the time can read all about how Goldman Sachs or JPMorgan had zero losing trading days, on their own account, in any given quarter. Because they have an institutional-trading advantage, denied to the rest of us fools.