Differences between Futures Brokers and Money Brokers + Refco, Trading Stories, and Much More!
hey traders this is blake marrow with trader summit and with me today not only do i have mr dick matthews from gc partners but i also have one of my colleagues from not only trader summit but also forex analytics stelios contagulas um good to have good to see you guys it's very nice to be here and you said my name right so well done you know i'm trying to bring out the the greek wife in me is that even a thing anyway yeah hey i i wanna i wanna you know i'm sure people are probably wondering well why is stelios here with uh with with you know blake and dick talking about dick's past but the fact of the matter is your lives and and people that you know have crossed paths around this time um and and i don't want to take too much away from that but that's why stellius is here today and i'm i'm always super happy to to be able to talk with stelius even though i talk to you so much during the day anyway during the week but um uh before we do that dick i want to go to you really quick you know after lcf you you moved to pre-bonds and and what was that part of your career like and and what happened there uh it was a pretty brief part of my career i went to pre-bonds i was uh kept out of the market for six months on gardening leave before i could start there and i started back as a money broker because i was the lad on the futures floor and it all just became a a real mess and literally we just got going on the futures floor and pre-bonds went bust it's they had a million pound bill reputedly that they couldn't pay which was a british telecom and as a money broker you need to pay telephone bills and they literally went under on a friday night and resurfaced on the monday under a new name and part of the deal was that they had to sell the futures business so when it came to my partner myself and literally we had like three days to put together the finance to buy i think it was 17 seats at the time from them and get going again and get all the authority signed off um we had two guys we spoke to uh one of which was refco richard reiner instead of a dear friend of mine uh financed the deal uh bought the seats they were short of seats brought to the seats their floor pressure was pretty poor we started writing the floor and and the rest is as they say history so that's that's so the the pre-bonds even though it was a very short period of your your your uh career it allowed you to to you know really i use this term jump in bed if you will with revco uh you know right after that and that's where i think some of your uh connections have really crossed over so so tell me a little bit about ruffco and and uh and stelius is going to be jumping in here i'm sure about you know some of the people that you know so so what happened at rufco the uh the move happened just the markets were really starting to accelerate and get busy i think it must have been i think 90 or 91 round about then and the markets were starting to take off and i traditionally having been a sterling money broker i used to take the sterling desk and the sterling desk at pre-bonds was probably the most important desk that they had uh and barclays and barclays merchant bank bzw were my two biggest clients at the time historically going back uh there's a guy called pete spence john luck humphrey percy at bzw who may or may not know and they were really big clients of ours and probably uh our biggest clients and before he went to africa he went to them said will you support us and they very kindly did and they stuck to their word uh i had a couple of really good kids working there uh on the sterling desk um goggs whose name i can't remember and if he listens says he'll kill me i just remember him as gog said he was a lovely kid and that's dreadful i can't remember his name and dave stoller who was known as a ginger tom he's like gingery hair looked like the ronald mcdonald um clown from afar the lovely guy and because we have very close links still with pre-bonds we're a big sterling money broker we would interact so we would know what swaps and for ours were doing and so we could price our back months out pretty well uh and harry as as i mentioned was a was a great client of ours and buck who's always supported were always fair to us and used us to well i don't know you tell us tell us why you so yeah so here's a link to us now so harry that dick mentioned was the guy who hired me at barclays and he was my mentor wow and he was ahead of uh the swaps initially sterling swaps and then the whole of sterling desk and um and really nice guy very smart trader and um when i first started i sat next to him and um one of the first brokers i actually spoke to was david stoller that dick just mentioned and he became my probably my favorite broker and a very very smart guy and you know also um he gave something extra that a lot of other brokers did but he you know when when markets moved and he gave me sentiment like when things moved and uh he would come down the lights i should tell you speak up and i would say what is it go oh uh there's a lot of moaning about this rally in short sterling people are really moaning so i know what to do right i just go in and buy everything so uh well no wonder he was your favorite but uh but it was he was you know really nice guy and it just you know everything tangles really nicely right with harry and with uh david and also you mentioned uh pete spencer he was the um the head of uh sterling cash the main sterling cash trader and uh i don't know if you know him actually you know we've been talking about so many times what's one of the main traits that you have to have to be a good trader and people say you have to have good psychology um peter pence boss john porter i don't know if you've heard of him he was the head of pretty much everything on the cash side and and more he used to have i think he had a psychology degree or something like that and he switched jobs in the middle or something so another really really smart guy i mean these guys would come to the market they would come you know we were the market makers were supposed to have big positions and then they would come to us and say oh can you execute this trade for us and it was bloody huge you know something that it took you days to execute but um anyway you know a collection of very um smart people that's for sure you know i uh dick's been it's been great you know over the last i want to say we're almost two months in to doing these tales from the trading desk uh interviews and and he's got nicknames for everybody i think he's got a nickname for everybody or at least everybody had a nickname how about how about you stella's did any of those guys have a nickname i did um harry and uh nats did you did you catch nat tais no you probably wouldn't he was after harry they gave me a nickname easy frog because um i used to i traded the frog book when i started the forward rate agreements and there was this tellius the easyjet guy obviously i was easy for they even made a nice image based on easyjet and they put it on my my screens as a background that was nice it was nice actually that's funny can i ask you a question how did you find the difference between a futures broker and a money broker because obviously i knew that the the money brokers at pre-bonds and others they were very different to futures brokers and it's hard to pinpoint why uh well futures brokers and swaps brokers that i had were very different because um the futures that i traded were traded electronically swaps was all over the counter so there was a lot of negotiation and kind of the soft aspect of it on on the swaps and uh you know with futures you could see straight away the price you could see everything obviously if you wanted to do something bigger you would have to discuss but swaps was very uh there was a lot of details and parameters and this and that so it was a you know i don't know what's it the most difficult job of the two that i think they're quite different but um uh yeah they it was it was different definitely different yeah so oh go ahead go ahead go ahead dick no i was going to say i i i am having done both of them i certainly preferred swaps from sitting down all day long but actually i preferred futures because of the immediacy and yes you had the prices okay i can work that for you i can do that a little bit better yes yeah a few premises here and then actually almost acting as a principal often for the bank and probably i shouldn't be saying that but you know people come on to us and say we want to sell you know the that month strip of reds and you've got a couple of ticks parameter to do it and you could improve a bit and lose a bit and actually that's what i enjoyed that you were allowed to think for yourselves in a way yeah and the other thing you have to remember for swaps the swap curve is constructed using certain points and there's different types of interpolations and this and that and you get a price on something and you say oh you know uh 18 months uh you know i pay six and a half and the guy will say what the hell are you talking about middle is seven you know there was a lot of disagreement about price but futures is it's there you know you can see it it's immediate so that's that's one of the big differences but um yeah and did you find you see that um something like ref cone i'm sure that you use gni and other brokers i know that barclays certainly did was that to confuse the market or disguise the market to what barclays were really doing as opposed to using your own floor team or or because we were better or we bought better lunches or told better stories the easy answer you were better or you know david that i used was better by a mile and um not only in execution but also in the whole um how do you say the relationship you know he would be you know i would help him out he would help me out you know there were there were times you know how things are he would come to me and goes oh my god you know i have this problem with this order i'm filled there and i don't have it i would help him and then you know when i had something that i needed he would do his best so it was basically you were better end of story i'm going to be really indiscreet here and you may have to cut this out but i remember the day the market changed that i filled an order for barclays and it was you know it was a big order five thousand lotteries on a big order in those days and it was by up to 98 and i bought some at 95 sub at 96 summit 97 uh and the guy just said oh the three lots that you bought at 95 just cross those up and have the ticks yourself keep the profit to yourself and the next thing i knew i had the market supervision department down on me and i have parked his compliance down on me accusing me of stealing from the bank and i've got a tape line of the bank do this right and obviously the guy who did it who i still know so this day got in trouble as well and that's when the market changed because all of a sudden you couldn't help anyone out because you were so scared of yeah you know the the old ways you would help a broker and a broker would help you out and at the end of the year it made for a better market in my opinion and then all of a sudden that just stopped and that was to me the turning point that must have been 95 96 before you're in i was before me yeah yeah yeah change and and you know the the whole reason uh stelios as you've been listening to these and and what we've been trying to point out and really what i mean well what dick has been trying to point out through through this is how the market's changed so much and how relationships have changed between you know the the brokers the clients the brokers between themselves the you know it it's really has changed and taken a turn for the worse if you will right probably yeah regulation and uh you know people are i'm i don't want to say oh they're scrutinizing everything because something was done that was wrong no but they're very they're scared of everything now that's a problem and you know talking about changes um there was a when was it 2008 or something like that 2009 when we got these algos starting to come into short sterling i don't know if you remember it it was a i think they were out of what was it poland some kind of eastern european country they were they were based in and short sterling in the futures they had x amount of liquidity they were nowhere near to euro dollars um and suddenly you would see volumes you know bid offer you know thousand two thousand three thousand contracts which never used to be like that used to be a hundred two hundred and it was all these algos and they were coming and putting in orders and if you wanted to actually trade they all disappeared you know they they played these games and and they um the market just changed completely from that point onwards um and it was a lot harder to trade because you didn't know if the thing you're looking at if you click the button to actually you know lift 2 000 reds or whatever it is you know 2000 this feature if they're going to be there or not before you knew they were going to be there and afterwards you didn't so algo is starting to mess things up from back then and now it's become you know pretty much in every market right it's uh they dominate they dominate volume i can remember from having to sign dave's dollars expenses that he used to like a lunch and a dinner were you the beneficiary of these i know you enjoy the garage on occasions i i am one of those people who very rarely asked for something i just wanted to see david in particular i want to see him so we went out for a burger you know stuff like that but obviously once in a while you go to a nice restaurant you do this but there were so many traders i knew uh who were like they would do a trade a big trade and they go down the line okay okay so where are you taking me next week i want to go to monaco i want to do this and that and you know big big things and i got offered a lot of things i declined pretty much everything i just wanted a nice restaurant or maybe a football match to watch you know arsenal or whatever that was it but it was great because you could get to know david and you could understand how his brain worked and what he would do and you know from a broker's point of view i could get to know the bank yes my client and i'd have a relationship with him so i could understand i could understand him and understand what he wanted and now i understand you can't even take a bank out to lunch yeah i'm hearing it's uh very difficult now to do anything but it was very nice back then because like you say it's it's beneficial for both sides you know you get to know each other and you understand how each other works so it's you know it's win-win so you know a dick just uh explain to us really quick those of us that are you know living living outside of uh outside of this all and and and listening to your story so what was like life like on the trading floor when you were with rafco or or you know starting to do business with rufco uh it was tough the long days i mean you're in half past six seven o'clock in the morning i know some of my old colleagues will be listening to this and say i never worked on a monday or you never worked on a friday afternoon they banned me from working friday afternoon so that was my favorite day for sacking people so i said i used to use that as an excuse not to go into the office to admit um it was tough it was hard work long days um physically very tough because you're standing up all day long your voice as you can hear from my voice is still not recovered from it but there was not one day that i didn't have fun that i didn't have a really good laugh hey and i am still friends with so many of the people i worked with um and we're all doing different things now but we're still friends and it built an amazing relationship and we had good days we had bad days i mean i can remember one day in particular that we had an out trade and someone claims he misread one of my hand signals and he sold the market instead of buying it and the next thing we knew we had a 400 000 out trade wow and which was big number and yeah i thought myself were wearing it and we only knew by his face as he kept trading kept trying to get out of it and trying to get out of it and he probably know remember dippy because he used to fill on paper on the sterlings he probably i've heard the name yeah for the name um by the dips not that he's silly and in the end yeah we cut it and we ran it and we got the market pretty much back on side we took a bit of a loss we took the mark back on site and we took this guy out out of the dealing room after off the training draw and he's got to be six foot two he's a big guy big you know strapping guy and said listen we've got to sack you we can't just allow this to go on we've got to sack you and you can see he's got like tears welling up in his eyes he said oh no can i still come to the christmas party though oh man i'm holding my business partner back from laying him out he's lost all this money and all this guy wants to do is just come and have fun with us and come to the christmas party oh my god now and we're still friends he contacted me in the last week or so to help on something i'm doing with the charity and guys i work with uh pre-bonds are still you know friends a guy on the charity with kevin davies was at pre-bonds and we worked together there so we built incredible relationships uh because it was it was tough yeah that's uh yeah you do meet sorry you do meet a lot of different people i mean i've told [ __ ] before i a lot of people i didn't like and i thought that they were not nice people in this in this industry but some people were really amazing and uh you know to also give you a perspective of what it's like on the trader side um we had these um dealer boards which had literally 15 to 20 lines to to brokers and they would all shout not all at once but you know they can all shout at once so you had like people shouting at you phones ringing internal microphone internal speakers it was just mayhem so one quality of a good broker was to actually manage to get yourself heard within the noise without being loud you know i don't know how some people did it but you know you know some people like they're still very clear very articulated and and to the point uh so um it was an incredible atmosphere i mean the first time i stepped onto the floor i thought oh my god i have to go i'm not so i'm not staying here but uh you know after a while you get used to it you get used to the noise you filter out everything else apart from the stuff that really you need to know and um and you know this thing that uh people call the broker's ear right you have to filter you have to select what you want to hear and after a while it becomes second nature and you don't even realize that you're doing it but uh it's yeah it's amazing you have to do that with kids and wife sometimes too right and dogs yeah the worst is my wife says to me that you know you're not listening to me you're listening to the table behind us and i could you know i'll sit in a restaurant and i'll be listening to conversations around me because that's what we all did exactly you're not listening to me you're listening to what that guy's saying over there you know he's talking about football or something and you can know and it is that broker's ear that you're constantly trying to pick up what's going on around you it becomes obsessional with it that's pretty that's an amazing skill that i that is only acquired on a trading floor i think so you know uh stellius i want to i want to say it's been it's been great having you here this isn't going to be the last time we're going to have you here i think on the next episode as well but before i wrap this up um you know as dick as you were as you partnered up with ruffco you eventually tell us about what eventually ended up happening did you eventually sell uh yeah eventually um refco financed us um we took over the floor operation the market expanded massively and one day i was standing on the floor later on in the afternoon you know like six o'clock and the phone rang and it was tom ditmer who ran refco in in chicago and said what do you want to sell what do you want to sell how much do you want to sell your business nice and i named the number off the software that's done wow you know and what happened to ref go subsequently they stood by their word and they they did the deal that's amazing well we're gonna end we're gonna end on that amazing note that's so cool and uh stelius i wanna i wanna thank you for joining us we've we've been having a ball yeah we've been having a ball here just dick and i but to have you here too is has been really wonderful and dick i wanna say thank you for for you know sharing these wonderful stories with the trader summit community i know you have people that are are diligently listening to each and every episode so and and and coming back to you with their own comments so thanks again for joining us today you're welcome all right well guys gentlemen uh we'll see you next week and for those of you that are are listening in on the trader summit site you know dick he provides all these great stories but he also does a lot of analysis on the markets you should check out his column on trader summit you can click the link below to find find more about uh mr dick matthews and then also get in touch with them thanks guys for joining us today it's been fun thank you thank you dick thank you blake please cheers down bye bye
2021-09-23 11:31
