Why Arent They Shouting?

by Kevin Rodgers

We're all familiar with the screaming greedy bankers destroyed banking. But is it really as simple as that? Kevin Rodgers has his doubts, and in this fascinating inside account of the financial world over the past three decades, he explains why. Taking us from the days when traders still shouted their deals down the phone to the silent modern world of computer trading, he shows how, far more than the pursuit of personal gain, it has been the pursuit of ever-more sophisticated systems, algorithms and financial models that has undermined banking and made it chronically unstable. He also shows how, by their very nature, the computers on which modern finance now so completely depend are hopelessly ill-equipped to forestall a future crash. Both a very personal and evocative account of how banking has changed since the 1980s, and a masterclass in how it actually works, Why Aren't They Shouting also offers a nuanced, if alarming, glimpse into its likely future.

Genres: Finance, Nonfiction, Business, Economics, History, Technology

Paperback

First published July 14, 2016

About the author

Kevin Rogers started his career as a trader with Merrill Lynch before joining another Anerican bank, Bankers Trust. From there he went on to work as a managing director of Deutsche Bank for fifteen years and latterly as global head of foreign exchange.

Reviews

[Athan Tolis · Rating 5 out of 5]

Let’s skip the preliminaries: Kevin’s book is the best I’ve read on many levels.

1. If my mom and dad ever need to know what I spent my youth doing on trading floors across Frankfurt, London and New York, this is now the best book in print, finally eclipsing Michael Lewis’ original classic, Liar’s Poker. No buckets of guacamole here, just the facts, expertly and humorously, but never condescendingly, laid out.

2. If you want a sober primer on the history of all major financial screw-ups from 1990 onward (except maybe for the Internet bubble), again this is the best in print, because it’s perhaps the first time an active trader has discussed them all in one book. “Why Aren’t they Shouting” brings the perspective that can only come with having had to deal with all of them personally: the ERM crisis of 1992, the Emerging Markets / LTCM crisis of 1997-98, and the financial crisis of 2008-09.

3. If it’s the sundry scandals you want to understand more about, that’s covered too: Kevin explains extremely well what happened with LIBOR and what happened with the FX fixings scandal, and here we’re talking 100% “horse’s mouth” level of understanding, as he was running the FX business for the #1 player, Deutsche Bank, when that scandal broke.

Away from all that, the book is MASSIVELY accessible. You do not need to have studied finance to read it. Small caveat: I actually don’t have terribly much time for Kevin’s writing style. He makes up for that with anecdotes from the trading floor that had me literally laughing by myself as I was reading the book. Like, for example, when the cocky trader was asked to bid more aggressively. A total classic!

Finally, there’s an attempt here at a more general theme! The big idea is that computers have acted as a catalyst for many of these crises, because they have lubricated our slow march toward complexity, which in turn has been found impossible to manage. He even hazards a prediction: that computers will succeed where many regulators have failed: in enabling the disruption of the “too complex to fail” dinosaurs.

Much as I work in the algorithmic space, I don’t totally buy this “big theme,” but Kevin (NOT a drummer for a top-40 act, which he’d led us all to believe during his career, but, hey, I can now follow his suggestion from page 4 and google it!) has packed this epigram to his career with so much solid judgement and wisdom, there was actually no need for an over-arching theme. The attempt at providing one is a welcome bonus.

[Michael Rollins · Rating 4 out of 5]

A really interesting book documenting the rise of computers within the banking industry and the impact they had on banking, and specifically the 2008 financial crisis. A well written book with a mix of narrative accounts of events within the finance industry and easy to understand explanations of banking, its products and flaws. As someone who did not know a great deal about banking going into to this book, some of the descriptions of complicated derivatives were somewhat hard to follow. However more generally most the explanations were clear and concise and I feel I have walked away with a much better understanding of the topics discussed.

[Dhruv Singh · Rating 5 out of 5]

Kevin Rodgers has written a masterpiece. Not only does the book cover crucial, revolutionary events that transformed the banking industry with respect to technology; it also touches upon important concepts in risk management and derivatives. This book is worth a read for anyone who wants to understand the impact of technology on the banking industry.

[Josie · Rating 4 out of 5]

Paints a picture of the transition of trade floors from past to present and the key events along the way. Full of lots of great anecdotes.

My only criticism would be if have preferred a bit more technical detail (I work in the field), but actually the fact there isn't makes it so much more accessible for new joiners or those curious as to what trade floors are like and how they evolved!

[Nunik Kartikarini · Rating 5 out of 5]

Really really love it and appreciate how Rodgers describe hoq every crisis in his tenure built. If you wanna know how technology affecting money market or financial currency market, you have to read it. This book is an equal of The Big Short (Michael Lewis) in FX market.

[Larkkonen · Rating 3 out of 5]

Okay book nothing bad to say, very basic contents with three distinct parts: Authors own history in banking, part on GFC of 08 and finally a section on regulation. For a reader not at all interested in banking / financial markets the book could be somewht dull.

[Exevion Book Club]

Available from Darren Schindler in paperback

[Gianluca · Rating 4 out of 5]

A wonderful book on the history of FX trading from a man who has lived through it all.

[Renate · Rating 4 out of 5]

Another book about the financial crisis. This one takes a slightly longer view than just the crash of 2007/08 and was written by a banker, i.e. someone on the inside. The surprisingly engaging writing makes it accessible to the likes of me who have a very tenuous and naive grasp on the world of finance.

Kevin Rodgers started writing this book after retiring in 2014 and much of the book is a personal memoir of his time in banking. His career started in foreign exchange (FX) at the beginning of the 1990s and coincidentally ran in tandem with the rise of computers in the industry.

At the start of his career computers mostly assisted with the back-office side of transactions but nowadays computers have taken over the actual buying and selling in an automated way. Much of this development is described and it makes for interesting reading. Whereas at the beginning humans made the decisions, these days algorithms do it. All the banks are pitched in an arms race against each other for ever faster trading systems.

This development also means that the types of people who work in banking has changed. In an interview with the author I found elsewhere on the web, he mentions the "I am so clever that I don't need to understand what I am doing" attitude.

Here is an anecdote that reveals somewhat regarding the relationship between he bankers and the IT staff :

A senior colleague of mine (banker) once asked him (IT manager) whether his team could complete a piece of analysis by an insanely tight deadline. 'No', came the reply. Shocked silence - IT people were normally a walkover. 'Well, I suppose we could come up with something by then', he said at last (at which my colleague's face brightened up for a moment), 'but it would be shit.' Happily his bluntness was matched by his competence and a refreshing disinclination to use jargon.

And another one about the new generation of whizz kids who entered the financial world:

We started to hire specialists to crunch data like the HFTs did and come up with better, faster dealing algorithms. These people, many of them Russian, were not like any FX professional any of us had ever seen. One, on his birthday, sent out an email to everyone in the London FX team telling us we could have a slice of his cake if we could tell him the first derivative of X to the power of X. I sighed to myself - quizzes on calculus weren't really a great way to fit in with others on the trading floor. But the feisty old spirit of FX wasn't quite dead yet. Within minutes Paul, a New Zealander and one of the remaining voice spot traders in London, arrived at the birthday boy's desk with the correct answer. "I never knew you were a mathematician." said the e-trader. "I'm not," replied Paul bluntly in his Kiwi drawl, "I just looked it up on the Internet. Now give me my cake." He returned to his seat with some chocolate gateau to the sounds of laughter and applause.

The other area of risk that was growing unstoppable was the mergers and takeovers that lead to all the money in the world being managed by a smaller and smaller number of firms. Banks pursued the 'supermarket' model where they wanted to provide a one-stop shop of financial services. And how this ended we all know: Everything started to collapse when one part of a risky business went bad. This bit I found interesting as my personal experience was the opposite. I found that increasingly one had to shop around for the best deal, ranging from getting a credit card to arranging a mortgage.

It is understandable that everything has become so complex in the financial industry that humans are no longer able to understand the risks being taken. The computers now also take care of risk management. A weakness here is using the past to predict the future. It might not.

And finally, the author also focuses on the role of the regulators. Who, amongst us lesser mortals, took any notice of the 1999 Gramm-Leach-Bliley Act that ended the separation of investment and commercial banking brought in by the Glass-Seagall Act of 1933? The latter was a result of the 1929 stock market crash that heralded in the Great Depression. (Despite the financial crisis, this blog by Michael Goldfarb, notes that the regulators are still not really doing their job.)

I've only highlighted a few of the points that stood out to me. This book contains more. A book that I would recommend reading and then reflecting upon. Don't worry about the alphabet soup of financial acronyms. A glossary is provided at the back.

It has not cleared the distasteful impression that I formed during and after the 2007/8 banking crisis but I do now have a picture that the problems were not just caused by a bunch of immoral and greedy bankers. It is more complicated than that.

[Remo · Rating 5 out of 5]

Fantástico libro. Una historia personal acerca de cómo la tecnología ha influido en el negocio bancario, contada por un tipo que al retirarse era jefe global de divisas (FX) de Deutsche Bank. El autor da detalles sobre las crisis de Asia en el 97, la de Rusia y LTCM en el 98, pasa algo de puntillas sobre la burbuja de las puntocom del 2000 porque no era su negociado y se recrea en la generación y derrumbe de la crisis de 2008. Contado por él, todo era inevitable y va enganchando naturalmente: los ordenadores perimten una gestión más eficiente del riesgo, por lo que se toman más riesgos, riesgos que se van haciendo más complejos porque los clientes demandan mayor yield y los ordenadores permiten de nuevo crear productos más raros, en un ciclo alimentado por demanda y competencia.
El autor también da mucha información sobre el día a día y las pequeñeces del trabajo de trader. Una lectura muy entretenida e instructiva.

[Darren · Rating 5 out of 5]

The financial world has changed, both for good and bad, yet some of the character and colour has been ripped away with the breakneck rush to add technology into the mix. This book gives a personal account of this revolution from somebody who had a senior role within, explaining a bit about the financial world and some of its innermost secrets at the same time.

The author’s focus is on the foreign exchange (FX) side of the business because that was his speciality, yet the automation issues equally apply in other sectors, just as the general changes to the method and way of financial trading are equal throughout. This is a book that can be different things to different readers yet it is far from being a technical, nerdy or insularly boring read. A curious generalist as well as a cynical market participant may both enjoy this!

There is a serious side to the book, as well, with the author wondering whether the explosive transformation that has occurred to the financial markets through technology could actually be endangering it, especially if unchecked. The author believes that the massive changes to the financial markets in the 1990s and 2000s may have strongly contributed to the 2008 crash, since technology made the creation of ever-complex financial instruments easy and high-speed trading networks encouraged greater speculation. It is not a rant-filled book but it may plant a seed or two of thought in the minds of many. For the rest, it is just an eye-opening, humorous and engaging read.

The author has done a great job in distilling a lot of often technical, insider information into a form that the generalist can understand. Occasionally it slips and a once open and flowing text becomes a little more impenetrable and insular, yet this does not overall spoil the book. For those who like to read more, there is an extensive range of notes and sources at the end of the book.

For a really low price you get an impressive, personally curated overview of the changes in financial markets in the past couple of decades, a bit of market knowledge and some thoughts about how things are developing and/or failing. It makes for a fascinating, important read about a subject you might not necessarily have thought you wanted to know more about!

Autamme.com

[Jo-Ann Duff · Rating 3 out of 5]

The rise of the machines.......

I chose this book on Netgalley because I work in the industry and know that the norm on a trading floor is well, no trading floor as most people would imagine it. It's more like Silicone Valley than Wall Street.

Author and FX Trader Kevin Rodgers delivers a witty, observant, memoir regaling a very long career in FX trading in London. The book begins in the heady days of ego, bravado, phone calls and shouting on a bustling trading floor and takes us to the future. To the gentle tap tap tap of a keyboard under a set of large, blinking screens. It's an interesting read detailing the development of technology within banking, along with snippets, funny moments, interviews, anecdotes and Kevin's own predictions for the future as technology becomes King.

As technology moves faster than we can keep up with 'Why Aren't They Shouting?' gives an underlying sense of risky, Skynet, type shinanigans; but were the old days really any better?

'Why Aren't They Shouting?' is an acerbic account of a trader who was there before, during, and living after the change in the way bankers and traders work. There are lots of interviews and anecdotes from other people in the industry, but this is definitely Kevin's tale to tell.

The perfect commuter read for any Dad in the finance business for Fathers Day!

[Ong]

This book explains the changing nature of banking jobs, concepts, and biggest scandals in the history of finance all with amazing ease. It even tells you about the life of an MD - the part about reading all the suspicious emails your subordinates send to each other, flagged to you by Compliance.

I wish I had read this book at the start of my career in finance. Could have saved me hours of scouring Investopedia and desperate Googling. Lol.

[Stephen O'Gallagher · Rating 4 out of 5]

A good read

Well researched and argued , if a little dry. Given the insane times, I was hoping for something a little more revealing. There was certainly plenty of material at DB to make a good movie .

[Javier · Rating 4 out of 5]

Very good book about the evolution of the structure of the derivatives banking business from 1990s till 2010s.

[Tom Richards · Rating 4 out of 5]

An engaging and insightful account of how advances in computing power, in particular, contributed to various financial crises. Rodgers also offers a nuanced view of the libor and and wmr fixing scandals, which condemns unequivocally their common feature of collusion between banks, but is the best explanation I have yet read of how the two scandals differ, and why the issues are not as black-and-white as they are usually presented, due to the illiquid nature of the interbank lending market (for libor), and the fact that executing a wmr fix necessarily involves trading in the market around the time of the fix. We need more experienced heads like Rodgers's in banking, or else we are condemned to repeat the mistakes of the past- but given the capital constraints and heightened regulation of banks now, it seems likely that the next crisis is brewing elsewhere.... Crypto, anyone?