Devine International

When I first started trading government bonds, the intra-dealer market was traded entirely over the telephone.  Bids and offers were communicated on green screens and through open telephone lines to intra-dealer brokers.  If you needed to buy 2year notes you had to telephone a broker and see where the offer was from other dealers.  (Today Brokertec and ESpeed by Cantor Fitzgerald have completely automated this market.)  In this golden era for voice brokers, there were a ton of characters on the other end of the line, but none was more colorful than the legendary Gerry Devine.

Gerry Devine by the time I began dealing with him was already in his 60s and was a legend on Wall Street.  He had once been a repo trader, but quickly discovered his gift was more for gab than for trading, so he set up his own firm Devine International in Westchester, NY and began brokering repo trades between dealers.  With high level contacts at all the major dealers he was able to succeed and survive for 40 odd years.

There were several odd things about Devine International.  First they were a voice only broker, meaning they didn't transmit price information on green screens.  Two when you did a transaction with them they had no clearing facilities so you wound up trading directly with the trader on the other side of your trade.  For example if I called Garban and hit a bid on 2year notes, I would be selling 2year notes to Garban.  If I called Gerry up to trade with Devine International and hit a bid on 2year notes, I would be selling 2year notes directly to Salomon Brothers, or UBS, or whoever had given him the bid.  Devine International relied entirely on relationships. 

However, the truly interesting thing about Devine International was its origins.  Now it’s true that Gerry had set up the company because he preferred chatting with his friends to taking risk, but the real motivation lies with his father, the famous Christopher J Devine.  In 1919 the public debt reached $25,000,000,000 (a rounding error today) and trading in government bonds became a lucrative field.  Christopher J Devine started working for the first legend in government bond trading Charles Frederick Fields.  After cutting his teeth on trading through the great depression, Christopher J Devine opened his own firm in 1933, the aptly named C J Devine & Co.  His firm grew from the original 8 employees to nearly 200 at his time of death.   C J Devine & Co. was the undisputed king of the Treasury Market.  In 1964 after Christopher’s death the remaining partners of C J Devine & Co. approached Merrill Lynch, Pierce, Finner & Smith about a possible takeover.  Merrill Lynch, having no experience to that point in government bonds, seized on this opportunity. 

When Christopher passed away he was a millionaire several times over.  In fact $18million of C J Devine’s capital was left to his estate.  This made the deal with Merrill a necessity.  As for his estate, his will he set up a trust for his children.  In order to encourage them to be successful and make their own way in life he set up several incentives.  His children would receive more money for the higher the position they had at work.  So  a vice president of a Wall Street firm would get X each month from the trust, where a CEO of a Wall Street firm would get 3X each month.  So Christopher’s son Gerry after working several years at Merrill Lynch as a repo trader decided that it would be much smarter to start his own small intra-dealer broker and make himself CEO.  Devine International was born.

For more information on C J Devine & Co as well as their namesake check out these two Time Articles:
http://www.time.com/time/magazine/article/0,9171,931752,00.html

http://www.time.com/time/magazine/article/0,9171,871138-1,00.html