Money Traders Accept High Risks For Rewards Pressure To Produce Drives Some To Make Costly Mistakes
They’re young, they’re driven, they’re smart - and they want to be rich. All over Asia, high-flying twentysomething traders juggle enormous sums of money every minute.
The pressures are tremendous. And so are the temptations to fake it when something goes wrong.
“There are huge incentives to be aggressive,” said Park Hyun-wook, an analyst at Seoul’s Coryo Securities Corp. “It’s an environment where anyone who doesn’t jump high enough gets fired.”
It’s the environment where Nick Leeson, a working-class boy from the housing projects of suburban London, thrived - until the pressure apparently led him into a spiral of disaster.
Leeson, a 28-year-old trader in Singapore for Barings investment bank, gambled billions that Tokyo’s Nikkei Stock Average would stay around the 19,000-point level. When the average dropped sharply, Leeson threw more and more money into the gamble until the losses mounted to around $1 billion.
At that point Barings, a 232-year-old pillar of British finance, went bust - and the clever young man from Watford became an international fugitive.
Mike Kokalari, a vice president at Paribas Capital Markets Ltd. in Tokyo, said he knew Leeson as a personable, competent trader.
“It’s like a nerdy guy in the movies who turns out to be a bank robber,” Kokalari said. “The pressure to artificially produce money must be considerable.”
Traders and financial experts around Asia painted this picture of Leeson’s world:
It is dominated by the young. Trading in derivatives, the complex financial instruments that Leeson dealt with, relies on sophisticated knowledge of computers, mathematical modeling and theories that few had heard of 10 years ago.
Another reason it’s unusual to see traders older than 35 is the physical burden of the job. Anyone who loses focus for a second could be blowing a chance to make millions on a minor fluctuation of the market.
International boundaries don’t mean much in Leeson’s world. He worked in Singapore for a British firm, dealing in Japanese stock futures. A trader in Hong Kong will get up in the middle of the night to check the Dow Jones industrial average.
Kokalari said he was up until 3 a.m. Tuesday, watching over derivatives trading in New York.
What makes it all worth it? It’s partly the thrill of beating rivals in an intricate game. But it’s mainly money.
Traders said Leeson could expect a few million dollars in bonuses if he had a good year.
“Everything depends on how much money you make for the company,” said Suh Seung-chul, an analyst at Hanshin Securities in South Korea. “It decides your salary.”