“Knuckleheaded” was how Citigroup CEO Chuck Prince described the actions of a group of his London bond traders on 2 August last year.
On that summer day the traders set about executing a strategy that would outwit the bond market and make profits in record speed. ‘Dr Evil’, named after movie character Austin Powers’ nemesis, was a computer programme that enabled the traders to fire off a surge of simultaneous sell orders in a fraction of the normal time. The ensuing panic among competing traders drove down prices and enabled the Citigroup traders to buy bonds at cut-price rates.
