Francois de Gombart-Tonnelle, Elmira’s lover, said, ‘Tell me, Alex, a big short such as any one of these – does the algorithm put it on entirely independently, or does it require human intervention to execute?’
‘Independently,’ replied Hoffmann. He wiped the details of the trades from the screen. ‘First the algorithm determines the stock it wishes to trade. Then it examines the trading pattern of that stock over the past twenty days. Then it executes the order itself in such a way as to avoid alerting the market and affecting the price.’
‘So the whole process is really just fly-by-wire? Your traders are like pilots in a jumbo jet?’
‘That’s it exactly. Our system speaks directly to the executing broker’s system, and then we use their infrastructure to hit the exchange. Nobody telephones a broker any more. Not from this shop.’
Iain Mould said, ‘There must be human supervision at some point, I hope?’
‘Yes, just like there is in the cockpit of a jumbo – there’s constant supervision, but not usually intervention, not unless something starts going wrong. If one of the guys in Execution sees an order going through that worries him, naturally he can put a stop on it until it’s cleared by me or Hugo, or one of our managers.’
‘Has that ever happened?’
‘No. Not with VIXAL-4. Not so far.’
‘How many orders does the system handle a day?’
Quarry took over: ‘About eight hundred.’
‘And they’re all decided algorithmically?’
‘Yes. I can’t remember the last time I did a trade myself.’
‘Your prime broker is AmCor, I assume, given your long relationship?’
‘We have various prime brokers these days, not just AmCor.’
‘More’s the pity,’ said Easterbrook, laughing.
Quarry said, ‘With the greatest respect to Bill, we don’t want one single brokerage firm knowing all our strategies. At the moment we use a mix of big banks and specialist houses: three for equities, three for commodities and five for fixed income. Let’s take a look at the hardware, shall we?’
As the group moved off, Quarry pulled Hoffmann aside. ‘Am I missing something here,’ he said quietly, ‘or are those positions way out of line?’
‘They do look a little more exposed than normal,’ agreed Hoffmann, ‘but nothing to worry about. Now I think of it, LJ mentioned that Gana wanted a meeting of the Risk Committee. I told him to talk to you about it.’
‘Christ, is that what he wanted? I didn’t have time to take his call. Damn it.’ Quarry glanced at his watch, then up at the tickers. The European markets were holding on to their early gains. ‘Okay, let’s grab five minutes while they’re all having coffee. I’ll tell Gana to meet us in my office. You go on ahead and keep them happy.’
The computers were housed in a big windowless room on the opposite side of the trading floor, and this time Hoffmann led the way. He stood in front of the face-recognition camera – only a few were cleared for access to this inner sanctum – and waited for the bolts to click back, then pushed at the door. It was solid, fireproof, with a pane of reinforced glass in the centre and rubber vacuum seals on the sides, so that it made a slight whoosh as it opened, the bottom of the seal skimming the white-tiled floor.
Hoffmann went in first; the others followed. Compared to the relative silence of the trading floor, the busy racket of the computers sounded almost industrial. The arrays were stacked on warehouse shelving, their rows of red and green indicator lights flickering rapidly as they processed data. At the end of the room, in a pair of long Plexiglas cabinets, two IBM TS3500 tape robots patrolled up and down on monorails, shooting with the speed of striking snakes from one end to the other as VIXAL-4 instructed them to store or retrieve data. It was several degrees colder than the rest of the building. The noise of the powerful air-conditioning needed to keep down the temperature of the central processing units, combined with the whir of the fans on the motherboards themselves, made it surprisingly difficult to hear. When everyone was inside, Hoffmann had to raise his voice for the people at the back.
‘In case you think this is impressive, I should point out that it is only four per cent of the capacity of the CPU farm at CERN, where I used to work. But the principle is the same. We have nearly a thousand standard CPUs,’ he said, resting his hand proudly on the shelves, ‘each with two to four cores, exactly the same as those you have at home, except without the casing and repackaged for us by a white box company. We’ve found this to be much more reliable and cost-effective than investing in supercomputers, and easier to upgrade, which we’re doing all the time. I guess you’re familiar with Moore’s Law? This states that the number of transistors that can be placed on an integrated circuit – which basically means memory size and processing speed – will double every eighteen months, and costs will halve. Moore’s Law has held with amazing consistency since 1965, and it still holds. In CERN in the nineties we had a Cray X-MP/48 supercomputer which cost fifteen million dollars and delivered half the power a Microsoft Xbox now gives you for two hundred bucks. You can imagine what that trend means for the future.’
Elmira Gulzhan was clasping her arms and shivering exaggeratedly. ‘Why does it have to be so damn cold in here?’
‘The processors generate a lot of heat. We have to try to keep them cool to stop them breaking down. If we were to shut off the air-conditioning in here, the temperature would rise at a rate of one degree Celsius a minute. Within twenty minutes it would be very uncomfortable. In half an hour we’d have a total shutdown.’
Etienne Mussard said, ‘So what happens if there is a power cut?’
‘For short-term interruptions, we switch to car batteries. After ten minutes of no mains power, diesel generators in the basement would cut in.’
‘What would happen if there was a fire,’ asked Lukasinski, ‘or this place was attacked by terrorists?’
‘We have full system back-up, naturally. We’d trade straight through. But it isn’t going to happen, don’t worry. We’ve invested a lot in security – sprinkler systems, smoke detectors, firewalls, video surveillance, guards, cyber- protection. And remember, this is Switzerland.’
Most people smiled. Lukasinski did not. ‘Is your security in-house, or outsourced?’
‘Outsourced.’ Hoffmann wondered why the Pole was so obsessed with security. The paranoia of the rich, he guessed. ‘Everything is outsourced – security, legal affairs, accountancy, transport, catering, technical support, cleaning. These offices are rented. Even the furniture is rented. We aim to be a company that not only makes money out of the digital age; we want to be digital. That means we try to be as frictionless as possible, with zero inventory.’
‘What about your own personal security?’ persisted Lukasinski. ‘Those stitches – I understand you were attacked in your home last night.’
Hoffmann felt an odd stab of guilt and embarrassment. ‘How do you know about that?’
Lukasinski said, offhand, ‘Someone told me.’
Elmira rested her hand on Hoffmann’s arm; her long brown-red nails were like talons. ‘Oh Alex,’ she said softly, ‘how awful for you.’
‘Who?’ demanded Hoffmann.
‘If I could just say,’ interjected Quarry, who had slipped in unnoticed at the back, ‘what happened to Alex was nothing whatever to do with company business – just some lunatic who I’m sure will be picked up by the police. And to answer your question directly, Mieczyslaw, we have now taken steps to give Alex additional protection until the issue is resolved. Now does anyone have any more questions directly relating to the hardware?’ There was silence. ‘No? Then I suggest we get out of here before we all freeze to death. There’s coffee in the boardroom to warm us up. If you all go ahead, we’ll join you in a couple of minutes. I just need to have a quick word with Alex.’
They were midway across the trading floor and their backs were to the big TV screens when one of the quants gave a loud gasp. In a room where nobody spoke in much above a whisper, the exclamation rang out like a gunshot in a library. Hoffmann halted in his tracks and turned to see half his workforce rising to their feet, drawn out of their seats by the images on Bloomberg and CNBC. The physicist nearest to him put his hand to his mouth.
Both the satellite channels were showing the same footage, obviously filmed on a mobile phone, of a passenger airliner coming in to land at an airport. It was clearly in trouble, descending far too quickly, and at an odd angle, with one wing much higher than the other, smoke streaming out of its side.
Someone grabbed a remote and pumped up the sound.
The jet passed out of sight behind a control tower and then reappeared, skimming the tops of some low sandy-coloured buildings – hangars, perhaps; there were fir trees in the background. It seemed to graze one of the buildings with its underbelly, a caressing gesture almost, and then abruptly it exploded in a vast expanding ball of
