After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.

Thanks to Putin, we have all learnt about the SWIFT messaging system and how, if you have it turned off, it can wreak havoc to your financial system.

Russia had to move interest rates from 9.5% to 20% in a day, as a way to stop their normal citizens from pulling out all of their cash from their local branch.

Before there was SWIFT…

Apparently, SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication and this is something which did not really exist when I was in my heyday.

What did exist was the humble Telex communication system, which SWIFT replaced and modernised.

Considering that the end of WW11 was confirmed by Telex, it shows how long the system had been around.

We would use Telex’s to communicate between us and overseas brokers as a way of requesting backend settlement, and also as a way to send out buy and sell orders.

In fact, a Telex was considered a legal document, so if a broker to broker Telex arrived at your desk, you were taught to give it extra respect.

We were also taught to sign them off with the words ‘Kind regards,’ no matter who they were addressed to.

In 1980, we would have a telex room, from which messages were sent and received and we would hand write them and the operator would type them into a machine.

They would also have a very large reference book, which contained the name and telex number of other machines worldwide, in alphabetical order.

Name-droppers

For those of you as old as me, here is an image of one, which will jog your memory.

I was once sitting at my desk, when someone handed me a Telex which had instructions for me to buy some shares and who’s name they were to go into.

It came from a suburban solicitor and it basically said:

‘Please invest the sum of £20,000 into (XYZ company) and register them in the name of Michael Barratt aka Shakin’ Stevens’.

Why they had to mention his stage name I will never know but at that time he was famous for having the hit cover record called ‘Green Door’ and maybe they were big-noting themselves.

Anyway here is a picture of said pop star and his record sleeve.

And here is his official video clip:

So, you can see that a Telex had many uses other than confirming the end of WW11, though I don’t know what a SWIFT message would look like.

Later we moved on to the dial up fax machine. Unlike a Telex, a fax was not considered to be a legal document or instruction — although in the case of the suburban solicitor, he could have just picked up the phone and called me with his instructions.

Later on, email took over as the main way to give written instructions and now the smartphone, though in between that, we would get instructions via our Bloomberg terminal.

Unfortunately for Bloomberg, having promoted their messaging system as ‘totally secure’, it became obsolete after Bloomberg’s own journalists were allowed to access them for stories.

This leaking of confidential information by Bloomberg led Goldman Sachs to develop its own system called Symphony, a couple of years later.

How the SWIFT system works I really don’t care but it seems to be doing its job in Russia, as a way of kicking their banks where it hurts.

And Shakin’ if you are reading this, please stay behind the Green Door. Thank you.

Kind regards,

TSB

The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at [email protected]

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