The only detail that The Guardian’s Joris Luyendijk could share about this mysterious prop trader was that he ordered tea.
It’s a small world he lives in, you see. And no prop trader wants to be known for talking to the media.
Prop traders, now a dying breed in the U.S. due to regulation that bars banks from trading with their own funds, are still alive in Europe. Luyendijk has been hunting them down and talking to them for his blog, ‘Banking Blog, Going Native In The World Of Finance.’ And just like the trader he spoke to in yesterday’s column, today’s emerging markets prop trader has a lot say.
What we found most interesting were the two principles this trader works from day in and day out (from The Guardian):
“I work from two principles. You need to be dispassionate about your trade, to control your internal hurdles that may attach you to it emotionally. Second, you need to have specific knowledge of the asset you’re trading. You must have contacts in the asset’s country that can supply you with information that is open to anyone else (otherwise it’s insider trading) but that is still extremely valuable.”
Also, he shared who he really thinks are the bad guys in the world of banking:
“Would I consider moving a particular market in secret to be illegal or immoral? Let me tell you what I think is illegal: what the banks have been doing with their structured products, asset-backed securities and collateralized debt obligations (CDO) and the whole sub-prime mortgage business. These guys must have known the risks, they must have seen that the complexity of these products was so high that in the event of a sudden crisis nobody would be able to understand them. They conned the rating agencies.
The whole model is broken. There won’t be a time as before, and the kinds of jobs in banking we had will not come back, not in our lifetime.”