It’s 1.50pm, April 19, 2023, and a group of bankers are dialled into a call to set the pricing on one of the largest government bond sales ever.
Senior staff appear to have been powerless in reining in big money traders acting with impunity in the market, on the trading desk – in some cases, when out on the town.published allegations by two traders of cocaine sprinkled on birthday cakes, interviews taking place in strip clubs and drunken rampages“There have been challenges in small pockets of global markets, and we have investigated and dealt with the conduct issues,” he told staff at the time.
That trader would later be a central figure in the April 2023 bond trade now being investigated by ASIC and, internally, by Herbert Smith Freehills.One trader – known for heavy drinking during office hours – was recruited on big money, and by all accounts did not modify their habits.seen emerging from a public bathroom multiple times displaying clear signs of using the substance. Midday drinking was common, with little consequences as senior staff returned to the office inebriated and obnoxious.
For years, banks and fund managers have insinuated that their rivals have been abusing the role for their own gain. But the AOFM and the banks have worked out procedures to manage that conflict, insisting on constant updates while the deal is live and detailed reporting after the transaction.The AOFM had already flagged that it would issue a new May 2034 bond between April and June 2023 – and traders did not have to wait long.
Wednesday was pricing day, and traders were in the office before dawn. The trades would be made in a dedicated room and cleared by brokers at Macquarie. One trader was assigned the job and a more senior trader was there to supervise. The deal was officially priced with the 10-year futures at 96.46 – the level called out by the trader. That implied a rate of 3.54 per cent – 100 less 96.46 – and the government had agreed to pay 9.5 basis points above that: 3.635 per cent.But within 10 minutes, the price had jumped 5 basis points from the intraday low to the intraday high of 96.51.
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Source: FinancialReview - 🏆 2. / 90 Read more »