Humpin’ BWICs

One of the most popular ways “clients” conduct “business” with us 3-go 1-go monkeys is through the form of BWIC.  While a common man might interpret this acronym as yet another way Wall Street jockeys have taken advantage of Main Street, this is in fact, quite the opposite.

BWIC – Bid Wanted In Competition.  In this situation, a hedge fund or other institutional “customer” blasts a list of bonds in which they either intend to sell or intend to only gauge the market’s appetite, to the 652 counterparties they currently accept “3-go 1-go’s” from.

At this point, the Ivy League educated trader will send the list out to the sales force either in message form or super urgent IB chat proclaiming they can get one of the following:

  • Feedback – means the customer will tell you how far back you are in an attempt to shop bids higher. Probability of a trade:  5%
  • Color – basically, this is one level above “Feedback” category. Client will respond with things like, “you’re points back” or “you’re not in the top 3”.  Probability of a trade increases to 2%
  • Look – customer shares with you (and usually at least 2-10 other monkeys) what the actual highest bid is or in some cases he may fabricate the highest bid. This sets off yet another competition driving the price to him even higher.  Probability of a trade has now increased to a WHOPPING 5%.
  • Last Look – customer tells you the highest bid and at what level he will execute with you. This is the pinnacle of monkey relationship.  Relationship status would equal groomsman, brother, father, etc.  These are exactly the type relationships your firm hired you for!  Probability of a trade 8%.

Once us monkeys have this information, we put our years of experience to work, where we begin to decide exactly how we are going to illustrate how we can “add value” to our customer.  We’ll send them the list and tell them we can get a look.  (Knowing they will likely hear the same from 5 other monkeys)  Approximately 15 minutes before bid time, we’ll temprorarily halt our 3-go 1-going to give our clients a kind reminder (aka beg on hands and knees) for a bid.  If the client isn’t in a meeting, hasn’t gone to lunch, logged off or just flat out pretending to not be there by hiding behind his grey dot on Bloomberg; he may respond with something like, “our model really doesn’t like this one” or “I won’t have time to look at the remit before bid time.”  However, if the sun, moon and stars have aligned he might respond with something like “89/ POT”.  In a very urgent manner, monkeys will have to press a total of 3 buttons to copy, paste and send the bid to the Ivy League educated trader. After 30 minutes to an hour of shopping everyone’s bids and with odds similar to that of winning the PowerBall it’s possible that you might just be the lucky monkey that has the WINNING bid.  CONGRATS!  WE DID IT!

But wait!  Remember that POT part?

POT is another harmless acronym that stands for “Pay On Top”.  When you are so lucky to receive this generous offer by a client, monkeys can expect no more than 1/32 or ~$300 sales credit per million of current face.  That’s before the firms usual cut of ~70% bringing your take home pay to buy about a ½ tank of premium gas for your 2010 5-series you bought back in the bull market.  TAKE THAT TO THE BANK!

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