The Fix. Vaughan Liam

tick was worth roughly $750,000 to his bottom line.

      For the umpteenth time since Lehman faltered, Hayes reached out to his brokers in London. “I need you to keep it as low as possible, all right?” he told one of them in a message. “I'll pay you, you know, $50,000, $100,000, whatever. Whatever you want, all right?”

      “All right,” the broker repeated.

      “I'm a man of my word,” Hayes said.

      “I know you are. No, that's done, right, leave it to me,” the broker said.

      Hayes was still in the office when that day's Libors were published at noon in London, 8 p.m. in Tokyo. The yen rate had fallen 1 basis point, while comparable money market rates in other currencies continued to soar. Hayes's crisis had been averted. Using his network, he had personally sought to tilt part of the planet's financial infrastructure. He pulled off his headset and headed home to bed. He'd only recently upgraded from the superhero duvet he'd slept under since he was eight years old.

      Chapter 2

      Tommy Chocolate

      Thomas Alexander William Hayes had always been an outsider. Born in 1979 and raised in the urban sprawl of Hammersmith, West London, Hayes was bright but found it hard to connect with other kids. His parents divorced when he was in primary school. When his mother Sandra remarried, she took Hayes and his younger brother Robin to live with her new husband, a management consultant, and his two children in the leafy, affluent commuter town of Winchester, bordering a stretch of bucolic countryside in the south of England. The couple fostered a child and later had a daughter of their own. They bought a big house on a pretty street lined with them. It was always full.

      Hayes's mother was a naturally timid woman, and when Hayes misbehaved or became angry, she did everything she could to placate him. From an early age few people said no to him. In his teenage years, Hayes saw less of his father Nick, a left-wing journalist and documentary filmmaker who relocated to Manchester in the north of the country with his girlfriend, a crossword writer for The Guardian newspaper. Hayes attended Westgate, a well-regarded state secondary school a 10-minute walk from his new home, and then Peter Symonds, a sixth-form college that was even closer. His college math teacher, Tania Zeigler, remembers him as a “kind, thoughtful and normal” student.4 Hayes achieved good grades but had a small circle of friends. Awkward and quiet, with lank, scraggly hair and acne, he rarely socialized and wouldn't learn to drive until he was in his thirties. When he did venture to the pub, he usually had one eye on the slot machines, waiting to pounce after someone else had emptied his pockets. Surrounded by the children of well-to-do professionals, he held onto his inner-city London accent, traveling back on weekends to watch his beloved football team, the perennial underdogs Queens Park Rangers.

      Hayes was a decent footballer, but from a young age favored solitary pastimes that fostered his natural ability for mathematics: computer games, puzzles and an ardent devotion to QPR, which offered a nerd's paradise of statistics, history and results to pore over. Fixations – along with social problems, elevated stress levels and a propensity for numbers over words – are a symptom of Asperger's, but in the years before works like The Imitation Game and The Curious Incident of the Dog in the Night-Time made the condition better understood, Hayes just struck people as withdrawn.

      Hayes remained a peripheral figure at the University of Nottingham, where he studied math and engineering. While his fellow students took their summer holidays, he worked 90-hour weeks cleaning pots and pulling pints behind the bar of a local pub for £2.70 an hour. He had no desire to go abroad when he could be earning money. Even when carrying out menial tasks, he prided himself on his dedication. “It didn't matter whether I was cleaning a deep fat fryer or deboning a chicken, those jobs got left to me because they knew there would be no chicken left on the bone and there would be no fat in the fryer,” Hayes would later explain. “That's just the way I am.”5

      Toward the end of his course he secured a 10-week internship at UBS in London, working on the collateral-management desk, a mundane but complex station where it was difficult to stand out. But Hayes did, and the Swiss bank offered him a full-time role when he finished his studies. Hayes turned it down in order to find a trading position. That's where the real excitement was.

      After graduating in 2001, Hayes got his wish, joining the rapidly expanding RBS as a trainee on the interest-rate derivatives desk. For 20 minutes a day, as a reward for making the tea and collecting dry cleaning, he was allowed to ask the traders anything he wanted. It was an epiphany. Unlike the messy interactions and hidden agendas that characterized day-to-day life, the formula for success in finance was clear: Make money and everything else will follow. It became Hayes's guiding principle, and he began to read voraciously about markets, options-pricing models, interest rate curves, and other financial arcana.

      Within a year Hayes was given a small trading book to look after while its main trader in Asia was away from the office. His risk limits were tiny, but it gave Hayes real-time exposure to the financial instruments, such as swaps, that he would go on to master. His timing was perfect. Swaps, in which parties agree to exchange a floating rate of interest for a fixed one, were originally used to protect companies from fluctuations in interest rates. By the time Hayes arrived they were mostly bought and sold between professional traders at banks and hedge funds, another high-stakes security to wager the future on. In 1998, about $36 trillion of the instruments changed hands. Within seven years that had exploded to $169 trillion. By the end of the decade it was closer to $349 trillion.6 It was a gold rush.

      In the laddish, hedonistic culture of the markets, the 21-year-old Hayes was an odd fit. On the rare occasions he joined bankers and brokers on their nights out, Hayes stuck to hot chocolate. They called him “Tommy Chocolate” behind his back and blurted out Rain Man quotes like “Qantas never crashed” as Hayes shuffled round the trading floor. He was bad at banter, given to taking quips and digs at face value. The superhero duvet was a particular point of derision. The bedding was perfectly adequate, Hayes thought; he didn't see the point in buying another one.

      There were also signs of his soon-to-be notorious temper. According to one story that made its way round the City of London, Hayes began seeing a woman from his office and one night arranged to make her dinner. Hayes cooked, while his date had a bath. When he'd finished, he called for her to join him. After asking for a third time, Hayes became so irritated he barged into the bathroom and poured a dish of shepherd's pie into the bath with her. The episode quickly entered trading floor legend, and traders and brokers took to hollering “aye aye shepherd's pie” and “get in the bath!”.

      At work, the complex calculations and constant mental exertion involved in trading derivatives came easily, but Hayes found he had something rarer: a steely stomach for risk. While other new recruits looked to book their gains or curb short-term losses, Hayes rode volatile market movements like a seasoned rodeo rider. In those early years he hit the dirt as often as he was successful, but his talent was clear and in 2004 he was headhunted by Royal Bank of Canada, a smaller outfit where Hayes could take a position of prominence and rise more quickly.

      RBC's London operation wasn't set up to trade the full gamut of derivatives products, so Hayes spent the first year or so working with a team of quantitative analysts and IT specialists to bring the bank's systems up to his standards. Hayes was a perfectionist, and, still in his early twenties, he helped the firm design a platform that could monitor minute shifts in profit and loss and risk exposure in real time – a set-up more advanced than at many of the biggest players in the market. It was a process Hayes would go on to repeat each time he started at a new firm.

      Finally, Hayes was satisfied, and he leapt into the market with his own trading book. Traders at the largest firms recall suddenly seeing minnow RBC taking the other side of big-ticket deals. Hayes may have been baffled by the simple rituals of office camaraderie, but when he looked at the convoluted world of yen derivatives he saw clarity. “The success of getting it right, the success of finding market inefficiencies, the success of identifying opportunities and then when you get it right – it's like solving that equation,” Hayes would later explain in his nasal, pedantic delivery. “It's

4

Nick Hayes quoting Tania Zeigler, Twitter post, Sept. 1, 2015, 1:52 p.m., http://twitter.com/justice4tomh.

5

Regina v. Tom Hayes (2015), Hayes's testimony, Southwark Crown Court, London.

6

“Semiannual OTC derivatives statistics,” Bank for International Settlements, 2015, http://stats.bis.org/statx/srs/table/d7?p=20092&c=.