They call him the fastest gun on the market.
His weapon of choice is the superfast computer.
His ammunition is made from complex mathematical formulas.
His soldiers wear thongs to work, drive sports cars and are the envy of the online chat rooms frequented by stock brokers.
Meet Dinesh ‘Danny’ Bhandari, the Indian-born entrepreneur who is leading a global pack of stock traders working in the shadows of the international markets using lightning-fast computer programmes which are based on “secret” algorithms.
The Indian-origin chief executive of Sydney-based Tibra Capital has caught media attention recently as he debuted on an Australian Young Rich List with a “conservatively-estimated” personal fortune of 40 million Australian dollars (US$36.7 million).
Bhandari, 32, a math whiz, has been ranked 40th on the list of 100 young (under 40 years) Australian entrepreneurs that was published a few weeks ago.
His mercurial rise, amidst the gloom which engulfed the world economy for most of the year, has also caught the attention of stock market regulators alike.
Bhandari, is one of the new breed of derivatives traders: they have no clients, they trade their firm’s own money using high-powered computer programs like F1 - Formula One, so-called because it is so fast - based on secret algorithms, Australian media reported.
US share market officials and Congress are mulling bans on some of their tricks. And Canada is likely to follow suit.
The New York Times and The Wall Street Journal have devoted pages to the dark arts of ‘’high-intensity’’ and ‘’low-latency’’ trading and the world of ‘’dark pools’’.
‘’Powerful algorithms - ‘algos’, in industry parlance - execute millions of orders a second and scan dozens of public and private marketplaces simultaneously,’’ The New York Times said in July. ‘’They can spot trends before other investors can blink, changing orders and strategies within milliseconds.’’
‘’It’s become a technological arms race, and what separates winners and losers is how fast they can move.’’
In Canada, these high-frequency traders, once shunned are being sought by brokerage firms who have realized that trading in millions of shares each day using lightning-fast, super-powered computer
algorithms can earn tiny profits — multiplied millions of times.
The method is likely to come under regulatory scrutiny in Canada soon, a recent CIBC World Markets report on high-frequency trading suggests.
While many of the high frequency traders shun the limelight to keep their secrets, Bhandari has recently emerged as the face of this new trend where technology is used to outpace regulatory attempts to keep a level playing field and fair market.
The ingenuity of Bhandari and his colleagues has enabled Tibra Capital to return a very impressive annual profit of 57.4 million Australian dollars in 2008.
The net profit has, according to the firm’s annual report lodged with Australian Securities and Investment Commission on Oct 30, gone up to 77.5 million Australian dollars in 2009.
The net profit looks even more impressive as Tibra Capital was established only three years ago after Bhandari was sacked by The Netherlands- based trading company Optiver.
The 32-year-old was so incensed over the departure from Optiver that he reportedly initially called his company FTD or F... the Dutch.
The animosity between his former employer and the Sydney-based trader did not cease with his departure as Optiver has filed a number law suits against Bhandari and his colleagues in Tibra. The Tibra team was accused of stealing Optiver secrets.
The law suits have failed to dampen Bhandari’s appetite for success and the money linked with high speed derivatives trading.
The company Bhandari started with just two million Australian dollars has catapulted him among Australia’s most admired young entrepreneurs.
According to media reports, Bhandari is a typical sport-loving Australian.
“For me personally, I enjoy a lot of sports, motor sports, cricket and football, all the great Aussie sports, and travel. My wife and I have been to many dozens of fantastic places together so that’s something we really enjoy doing,” he was quoted as saying by Sydney Morning Herald newspaper recently.
“It’s nothing glamorous; we just like getting the job done, and the rewards aren’t necessarily obvious to everybody but they’re certainly obvious to us,” the Tibra chief added.
Bhandari gave this insight into his business in Australia. ‘’Our aim essentially is to trade in other people’s risk and trade with a view to keeping our positions relatively neutral.
‘’What we’re doing is a lot of transactions, many thousands of transactions a day, and obviously just trying to make a small profit on each or on some of those trades.’’