T. Bunn - Drummer in the Dark

“There isn’t any operation.”

“We realize that.”

“I’m like the pet monkey they pull out to show potential new investors. Any time I go to them with an idea, they freak.”

“All this,” Burke soothed, “is about to change.”

Thorson was like most of the senior traders Burke had ever met, utterly refashioned by his trade. He could once have been fat or smooth or tall or a jock. Now he had been crammed into the hot press of the trading floor. His face was expressionless, the gaze scalded by the suppressed fire of the floor at full cry. “I’ve been making enquiries. For other jobs.”

“We know.”

“You think you can change my mind?”

“Absolutely.”

“All right.” He crossed his arms. “So talk.”

“You have just been made the newest member of the First Florida board of directors.”

The news brought a grim smile. “Bet that made old Carlton dance a jig.”

“What Carlton thinks is no longer important. We acquired this bank for one reason and one reason only.”

Thorson’s eyes widened marginally. “Me?”

“Of course not. First Florida’s Interbank connection. But it would be excellent if we could have you as well.”

Currency trades operated in a two-tier system, much like stocks. Currency markets in Chicago, New York, London, Zurich, Tokyo, and Singapore operated as centers for most transactions. Until recently, small and medium-size trades-anything up to a hundred million dollars-went through brokers tied to one or more of these exchanges. But electronic trading was fragmenting the system. Increasingly even smaller currency swaps could take place on-line and direct. Brokers stayed in business for two reasons: the confidentiality they offered, and the information they brokered along with their trades.

Just as with stocks, however, a second tier operated high above this one. In the lofty spheres of big-fund secrecy, major currency swaps called blocks went through the Interbank Exchange without ever touching the street. Once the deal was done, the electronic tape showed a crossed order for some massive amount, anywhere up to five billion dollars a pop. The exchanges had no choice but to take note of the new currency position and recognize themselves for the small fry they were.

The Interbank market was the most exclusive of the currency exchanges. Entry was restricted to the top fifty U.S. banks, the biggest Wall Street mutual funds, and the huge brokers heavily involved in currencies. The list was very tightly restricted, and for good reason. On the Interbank Exchange, all transactions were one hundred percent leveraged . There was no money down. Credit lines ran among all players, with no collateral required. Every player had settlement limits. Any transaction was ticketed against the limit. But the limits had nothing to do with solvency and everything to do with reputation.

Hedge funds were kept strictly outside the Interbank Exchange. Which meant Hayek had to post margins, or put down hard cash as a percentage of each transaction. It also meant every currency trade was held up to the public eye, or had to pass through brokers who were notorious for selling information to their best clients. Not only that, but the more conservative Interbank players refused to deal with hedge funds at all. In Forex vernacular, the Interbanks would not do Hayek’s name.

Thorson’s mind scanned the new data at a trader’s speed-lightning fast. “You’re fronting for an American fund?”

“That is correct.”

“Which one?”

“Are you with us or not, Mr. Fines?”

“Oh, I’m definitely willing to give this one a chance.”

“Then the answer is the Hayek Group.”

The news blew him back a fraction. “Can he get away with it?”

“We’re working on that. But for the moment, this information needs to remain confidential.”

In strict accordance with the law, hedge funds could not own a bank. But the same law also outlawed banks from owning hedge funds. The banks hated this part. So they had spent millions lobbying to have the law’s teeth pulled. Now six of America’s top ten banks either owned sizable portions of hedge funds or operated their own in-house. Derivatives and foreign exchange transactions were classed by American accounting law as contingent liabilities . This meant that the banks did not need to show these holdings, or these risks, on their official balance sheets. Which meant they did not have to set aside reserves to cover any portion of these contracts. It was the first time since the Depression that banks had found a way around one of their most hated federal laws, the cash margin requirement.

Thorson nodded once, accepting the new world order. “So what now?”

“Talk to your guys. Tell them they’re going to be flooded with new capital. And the new owners know everything there is to know about incentive payments.”

“Nice little bo’,” Fines agreed. Bo ’ was trading vernacular for everything above and beyond actual salary. “Why not just park the fund in your Liechtenstein bank?”

Burke simply waited, letting the guy work that one out for himself.

“You don’t want your new asset management team sitting on the other side of the world.” Eyebrows raised a notch. “I guess that means we’re talking serious money.”

“Tell your team they’re going to make a fortune off this.”

“There’s a catch,” Thorson said. “There has to be.”

“Hayek is known for his secrecy. It’s one reason why he’s been on top for so long. It’s not enough for your traders to do well. They have to do it quietly.”

“Anybody who talks gets the street. I can handle that. And so can they.” A quarter-second pause. “How much new capital are we talking here?”

“Four hundred million dollars will be transferred to your Capital Markets account on Tuesday. Another four hundred Wednesday.” Burke pulled a second envelope from his jacket. “Account instructions and confirmation of your new position. And new salary.”

Thorson’s hands trembled more than those of his chairman’s, but for different reasons. The sheet Fines held declared him to be a rich man. “You’re bringing in your own senior trader?”

“That’s right. His name is Brant Anker. Top quality. Formerly with B of A.”

“We don’t have the staff in place to handle another eight hundred million in trades.”

“You do now.”

Thorson glanced up from the sheet. “Or the space.”

“They’ll just have to cram in. For now.”

“How many people are you bringing in?”

“Twenty-five to start. We’re doubling your staff, effective tomorrow.”

“So the eight hundred million-”

“Is just a start. We want you to begin establishing Hayek as a preferred customer. Open a credit line for Interbank exchanges. Start as high as you can without creating a backlash. Say half a big one.”

Fines could no longer hide his astonishment. “Half a billion is twice my current ops.”

“This is just a start. If Hayek wants to move beyond this level, call me day or night.” He set his card on the desk. “My private number is on the back.” Burke rose, glad to see the man rising with him. The two were moving in tandem now. “The new staff will be here Tuesday.”

Saturday

The Federal medium-security prison farm was just as Jackie had always pictured it. The visitors’ parking was surrounded by pines and fronted the Beeline Expressway. The air was very quiet, the heat cloying. What in Orlando had been just another muggy spring morning was now compacted tight with dread. Jackie fumbled with the bottle of pain pills, spilling two into her shaking hands and another three onto the sidewalk. She stood there a long moment, then slid the pills back into the bottle.