more margin on one exchange, he should have been earning it on the
other. After all, he was supposed to be arbitraging.
It is hard to understand why Barings London was unable to expose
Leeson far earlier than it did. For instance, his explanation that the excessive
and growing margin payments were due to customers in different time
zones should have been questioned immediately, because the only exclusive
third-party client that BFS had was Banque Nationale de Paris (Tokyo).
All of BFS’s other clients were existing customers of Barings’ London and
Tokyo offices. It is even more astonishing that Barings London never asked
Leeson to substantiate his requests for margin funding. Not only had they
risen to stratospheric levels (i.e., from $354 million at the end of December
1994 to $835 million and then $1.2 billion during the first two months of
1995), but also, the day-by-day amounts he requested were identically split
between OSE and SIMEX—an event that should have occurred perhaps
once a century and not every day.