When foreign investment banks made $250 million on an erroneously priced Italian postal bond issue last year, the then chairman of Nomura's London office, Hitoshi Tonomura, was all set to follow CSFB's example and return Nomura's profit - thought to have been around $50 million.
He phoned his chief trader Simon Fry to let him know. Fry protested vehemently, saying the trade was worth far more than any future relationship with the Italian government. Next came a sound of tapping on the other end of the phone as a calculator went to work. "Alright," said Fry, apparently relenting. "Give it back. But I still want my bonus." Tonomura changed his mind, Nomura kept the money.
Though possibly apocryphal, this story demonstrates Fry's awesome reputation for shrewdness and tough bargaining. He has made a name as one of the smartest traders in mispriced fixed-income securities, and one of the hardest bargainers in the business. Few bankers, even at the high-rolling US banks, have managed to negotiate such advantageous performance contracts - the gossip is that Fry's profit share at Nomura became so expensive his employers were forced to buy him out of it.
Tall, silver-haired, with a penetrating not-to-be-trifled with gaze, Fry is not fond of publicity (he declined to be interviewed) but neither is he particularly discreet when it comes to spending money.
He recently bought an old primary school in Mayfair, where he has installed a 25-yard black marble swimming pool in the basement. He owns a collection of classic Aston Martins, which tend to break down: he was recently given a push start in Sloane Square by a man driving an ageing Ford Capri. His modes of transport also include a 105-foot yacht and - not one to queue at airports - he has upgraded his private plane from a turboprop to a jet, complete with stewardess.
Born in North Weald, Essex, in 1959, Fry went straight to Yamaichi Securities after leaving school. From there he moved to CSFB as a Eurobond trader in 1980. Within four years he was the second most senior trader on the desk.
Next, he moved into high-yield products and was soon making a name for himself as one of the first to spot the potential of asset swaps. In the downward credit environment of the early 1990s, Fry and his team bought heavily into distressed, or inefficiently priced, fixed-income securities - mispriced either because a cloud was hanging over the issuer or because of "complicated features" which the market didn't fully understand. His skill, say fellow traders, lay not so much in mathematical ability, or credit analysis, as in the knack of gauging someone's pain threshold. Thus he was able to source the bonds more cheaply than his competitors.
Fry would then transform the securities through interest rate swaps into floating-rate notes, and use the salesforce to sell them to banks as synthetic loans. The size of his trades grew enormously as Allen Wheat, then president of CSFB, began to give him more of the bank's balance sheet to play with.
At Nomura, where he moved in 1994, Fry's star continued to rise in line with the growth in proprietary trading. Soon he was running a combined asset-swap and convertible book of some $5 billion in an incredible bull market. Last November he took overall charge of London's equity and fixed-income trading business.
His skill, say former colleagues, lies in his calmness and in his long-term approach. "He doesn't panic," says one, "and is supremely confident in his own ability. And he's certainly not afraid to take a risk." Fry, he adds, is straight to deal with, laid-back and happy to delegate a good deal of authority to those beneath him.
Some question whether his attitude to people in the vastly less profitable, plain vanilla securities business could cause friction in his new job. Others say that as the product of an incentive scheme which rewards him entirely at the top line there is a danger of attempting to speculate excessively. "If he was really smart, he'd quit now while he's still ahead," says a rival trader. Perhaps he intends to do just that. According to friends, Fry has long talked of getting out by 40. Philip Eade