Читать книгу Speak to the Man Called Hope - Lawrence Hall - Страница 6

The stale feel of the room starts to grate on Ro. The white walls. The fake-wood panelling on the gallery wall where a sink along with tea and coffee making facilities and three jugs of water sit. The frosted glass lines the glass wall which runs along the hallway. Opposite is a room but not with a view. It faces directly to a 90s building of little appeal. The instant coffee tastes distinctly like pine-o-clean and the water is warm. It's been a long day. The nervous perspiration leaves Ro somewhat clammy under the armpits and the antiperspirant has given up. He starts to smell a little. It's just after four thirty in the afternoon. He only left the room for a thirty minute lunch, a coffee downstairs at three and to go to the toilet. Sam has been in and out of the office constantly all day taking and making phone calls. Clint has been mostly updating his business case, working through business models and changing some revenue and cost estimates.

Ro has been able to identify several compliance policies he needs to review and got his request in before lunch. He checked the history of fines which are published by the regulatory enforcement team and saw nothing in reference to Jonathan Forest Discount Brokers. That was positive.

One of the key changes in the broking industry over the last ten years has been the ability to automate orders placed by clients entering the market directly without needing to be re-keyed by someone at the broker. This is known as Direct Market Access, or DMA for short. This capability removes the need for persons to look at every order sent by a client before it is placed on the market, on the stock exchange. These persons spend months in dedicated training, doing books of theory and then sit two tests. Once they pass these they are authorised by the stock exchange to make amendments to orders, to accept and indeed reject any orders from clients or the internal business known as the principal trading desk. DMA, allows a broker to set business rules or logic in its order management system which filter the orders submitted by clients and either let them through to be automatically placed on the market or to be sent to a designated person to check. The intent is to ensure what is called a ‘fair and orderly market’, preserving the integrity of the stocks listed on the stock exchange. More than 95% of orders are DMA. The business rules or logic must be written in a compliance policy document, submitted to the stock exchange for approval to be used and then implemented by adjusting the filters in the order management system. If any buy order submitted to the broker is say more than 1% above the current buy price it may fail the filter and be sent to the designated person for review. The designated person may either reject the order or notify the person submitting the order that it is too high. There are many filters designed to prevent manipulative trading and other regulatory compliance obligations. The policy document must be maintained, the filters must be tested by both technology and compliance persons and submitted to the stock exchange for each new major version. The Jonathan Forest policy document seems light on. It's only 6 pages long and does not talk in detail about how the order management system is maintained. This information is important for two reasons. Firstly, it should demonstrate detailed knowledge of the system so there is not any reliance on key persons only one or two of whom may know how it works. Secondly, this is a key component of the technology stack. The order management system will need to be integrated with the Mason Thompson banking system. Unfortunately there is no information to this regard.

Sam walks in, still talking on his phone, he gestures to Client and Ro, ‘anything of significance yet?’

Both Ro and Clint shake their heads, not yet.

‘Yep’, Sam commands, ‘let’s do it Monday.’

‘Ok, bye’, he responds and then abruptly hangs up this phone.

‘Ok, good news,’ Sam continues to Clint and Ro, ‘ as long as everything goes well here and we don’t uncover anything untoward, we’ll go to the Jonathan Forest offices for another two days from Monday to discuss post acquisition plans.’

Ro feels puzzled. He’s not sure what this means. Before he can say anything Clint chimes in.

‘How will that work?’ He asks.

‘It’s just working through the options for how the future business will operate. We’ll talk about the customer value proposition, talk through some business and operating models. Really to identify any big rocks which might need to appear on the deal agreement. We’ll need a few more people to come up to participate in the working groups such as compliance and technology.’

‘Ok’, Clint acknowledges, ‘ be interesting to hear their thoughts.’

Sam claps his hands and suggests they head to the hotel to get changed, provide email updates on the progress of the day to Franc and other execs and get ready for dinner.

Ro slumps into the only chair in the room. A bone coloured winged-back chair with velvet trimmings and soft cushioned seat. In front is a low positioned foot stool and Ro takes advantage of this. He raises his fit and takes off his silver and burgundy diagonal striped tie. He tunes into his favourite business channel to get a quick summary of the domestic markets and an insight into potential trading that night. He soon changes channels to see if there is any sport on. Fortunately, the Gunners are playing. It's a replay of their game against Spurs. A goal feast and one Arsenal won by 1 goal. Ro is tired, he doesn’t really feel like spending more time with Sam and Clint at dinner. Maybe he can have a quick dinner with them and head back to the hotel. He considers declining dinner and ordering take-in. Probably not a good career move given the nature of this business is changing rapidly. It could all easily pass him by and declining a social dinner engagement might not keep him in the team. Clint sends a text message saying to meet him and Sam at the hotel restaurant in fifteen minutes. At least that way Ro can extricate himself sooner rather than later. He decides to go to dinner.

Dinner conversation with Sam and Clint is all work. Talk about the deal, the fact the bid is looking somewhere in the order of $80m. Ro nearly chokes on his wine. The other bidder is an international futures trading company looking to establish a presence in the local market and buying a local broking business in the process. Sam thinks that whilst the bid is highly competitive its not an ‘all-in’ or ‘get it at all costs’ type of bid. He does think that Jonathan will be prepared to accept a slightly lower bid from Mason Thompson compared to accepting an offer from the international futures trading business. Ro chews on his steak eagerly listening to the intricate details of the deal.

Sam pours from the water jug and takes a sip to quench his thirst. He’s got more to say. He leans forward to grab a warmed dinner roll from the basket.

‘There’s another suitor who has been in touch. I’m keen to talk with them. Oakbank are interested in looking into a merged operation of their broking business’.

Oakbank is the largest investment bank in the country. It has an esteemed reputation for doing deals and making lots of money especially when M&A markets are flying. Oakbank is the undisputed champion of mergers and acquisitions.

Sam continues, ‘they’ve recently recruited some technology talent to help build out their platform but they’ve realised this is a scale game and they need customers to make the platform margins meet expectations’.

These days broking has a lot of high fixed costs. The need to maintain cutting edge technology and integration with exchanges means much investment is required. Increased automation and moves to screens away from people standing in pits simply means that increased trading volume leads to disproportionately higher profits. The easiest way to increase volume is to increase the number of clients, active clients.

‘I’ve initiated discussions just today and I expect we’ll engage with them in the next week or two once legals are in place. Franc is open to exploring this option as well. We’d probably get a better quality client from Oakbank than we would from Jonathan Forest.’ He says. ‘I’ve engaged Pridman Partners to look into the market for other potential prospects. I think there may be more suitors, others keen to take the opportunity to deal with a major bank. This is getting interesting’, he grins.

Ro wonders who would realistically be a potential seller. Sure, there may be several small broking houses but they don’t have the technology platform that could support the business going forward. Mason Thompson isn’t just after scale its after technology to achieve that scale. There may be one or two smallish niche technology platforms with small ultra high clients but their custom platform probably wouldn’t pass the in house technology and security reviews and their client base, whilst appealing, doesn't suit a high street bank looking for low risk, high margin deposits.

The sticky date pudding and botrytis wine go down a treat. Ro feels bloated. It's time to finish up.

‘See you at the offices in the morning. I think we can sit down at eight thirty.’ says Clint, reminding all at the table of the task at hand.

‘I’m meeting with Alfie for breakfast so I’ll see you in the offices later on’, adds Sam, ‘ maybe start framing up your findings ready for your final report and advice to the deal committee. I want to see a draft before we leave tomorrow’.

Ro still has much to sift through at the offices of Everton Marks tomorrow. He now wishes he didn’t indulge in so much red wine. At least the steak will have soaked much of it up.

One of the few hotel perks is the ability to watch tv in bed. Ro props up on the full choice of inhouse pillows and tunes in to see the international markets open. Looks like a dull day. No corporate news or economics news out.

Breakfast at a nearby cafe always appeals more to Ro than the hotel buffet. It costs less than half the price and avoids any awkward interactions. He likes his eggs over easy, the bacon crispy and from a regional farmer, not supermarket rashers; garlic mushrooms, roasted red tomato and spinach with lemon juice all neatly presented on crusted sourdough bread. The coffee is not great but he can pick up one from a better barista near the office on the way. He reads the local paper and keeps the deal committee draft report ticking over in the back of his mind. His phone rings. Its Roland Baker, the contract manager from Atkins Robertson. He has become a good friend to Ro. They talk regularly about arrangements between Mason Thompson and Atkins Robertson. He has called to let Ro know that John Ruth has resigned. He has another role to go to but will not say where. It's in the same industry so he has to be walked out. He must leave immediately. Ro ponders the thought of where John may be going. He suspects Roland knows but will not say. He won’t press Roland today.