It was appearing at that instant in dealing rooms all across the world – 8.30 p.m. in Geneva, 2.30 p.m. in New York, 1.30 p.m. in Chicago:
The CBOE has declared Self Help against the NYSE/ARCA as of 1.30 CT. The NYSE/ARCA is out of NBBO and unavailable for linkage. All CBOE systems are running normally.
The jargon masked the scale of the problem, took the heat out of it, as jargon is designed to do. But Hoffmann knew exactly what it meant. The CBOE is the Chicago Board Options Exchange, which trades around one billion contracts a year in options on companies, indices and tradable funds – the VIX among them. ‘Self Help’ is what one US exchange is entitled to declare against another if its sister-exchange starts taking more than a one- second time period to respond to orders: it is the responsibility of each exchange in the United States to ensure that they don’t ‘deal through’ – that is, offer a worse price to an investor than can be obtained at that precise moment on an exchange elsewhere in the country. The system is entirely automated and operates at a speed of thousandths of a second. To a professional such as Hoffmann, the CBOE Self Help alert gave warning that the New York electronic exchange ARCA was experiencing some kind of system breakdown – an interruption sufficiently serious that Chicago would no longer re-route orders to it under the National Best Bid and Offer (NBBO) regulations, even if it was offering better prices for investors than Chicago.
The announcement had two immediate consequences. It meant Chicago had to step in and provide the liquidity formerly offered by NYSE/ARCA – at a time when liquidity was, in any case, in short supply – and it also, perhaps more importantly, further spooked an already jittery market.
When Hoffmann saw the alert, he didn’t immediately connect it with VIXAL. But when he looked up in puzzlement from the screen and ran his eye over the flickering lights of the CPUs; when he sensed, almost physically, the phenomenal volume and speed of the orders they were processing; and when he remembered the immense unhedged one-way bet VIXAL was taking on a market collapse – at that moment he saw what the algorithm was doing.
He searched around the console for the remotes for the TV screens. The business channels flickered on at once, broadcasting live pictures of rioters fighting police in a big city square in semi-darkness. Piles of garbage were on fire; occasional off-camera explosions punctuated the chatter of the commentators. On CNBC the caption read: ‘BREAKING NEWS: PROTESTERS SWARM
STREETS IN ATHENS AFTER APPROVAL OF AUSTERITY BILL’.
The female presenter said, ‘You can see police actually hitting people with batons there…’
The ticker in the bottom of the screen showed that the Dow was down 260 points.
The motherboards churned on implacably. Hoffmann set off back towards the loading bay.
At that moment a noisy cortege of eight patrol cars of the Geneva Police Department swept down the deserted Route de Clerval, slammed to a halt beside the perimeter of the processing facility, and sprouted along its length a dozen open doors. Leclerc was in the first car with Quarry. Genoud was in the second. Gabrielle was four cars back.
Leclerc’s immediate impression as he hauled himself out of the back seat was that the place was a fortress. He took in the high heavy metal fence, the razor wire, the surveillance cameras, the no-man’s-land of the car park and then the sheer steel walls of the structure itself, rising like a silvery castle keep in the fading light. It had to be at least fifteen metres high. Behind him armed police were disgorging from the patrol cars, some with Kevlar body armour or blast-proof shields – pumped up, ready to go. Leclerc could see that if he were not very careful, this could only end one way.
‘He isn’t armed,’ he said as he passed among the deploying men, clutching a walkie-talkie. ‘Remember that – he has no weapon.’
‘A hundred litres of gasoline,’ said one gendarme. ‘That’s a weapon.’
‘No it isn’t. You four need to deploy to the other side. No one tries to go in without my orders, and absolutely nobody shoots – understood?’
Leclerc reached the car containing Gabrielle. The door was open. She was still in the back seat, clearly in a state of shock, and worse was to come, he thought. He had continued to read the exchanges on the dead German’s laptop as the patrol car raced across Geneva. He wondered how she would feel when she discovered her husband had invited the intruder into their house to assault him. ‘Madame Hoffmann,’ he said, ‘I know this is an ordeal for you, but would you mind…?’ He offered her his hand. She looked at him blankly for a moment, then took it. Her grip was tenacious, as if he was not helping her out of a car so much as hauling her out of a sea that threatened to sweep her away.
Emerging into the cold night seemed to wake her from her trance, and she blinked in amazement at the sight of the force assembled. She said, ‘All this just for Alex?’
‘I’m sorry. There is a standard procedure for cases such as this. Let’s just make sure it ends peacefully. Will you help me?’
‘Yes, of course. Anything.’
He led her to the front of the column, where Quarry was standing with Genoud. The company’s head of security practically jumped to attention as he approached. What a weasel he was, Leclerc thought. Nevertheless he made an effort to be polite to him; it was his style.
‘Maurice,’ he said, ‘I understand you know this place. What are we dealing with exactly?’
‘Three floors, separated by timber-framed partitions.’ Genoud’s eagerness to help was almost risible: by morning he’d be denying he ever knew Hoffmann. ‘False floors, false ceilings. It’s a modular structure, each module filled with computer equipment, apart from a central control area. The last time I was inside, it was less than half- occupied.’
‘Upstairs?’
‘Empty.’
‘Access?’
‘Three entrances. One is a big unloading bay. There’s an internal fire escape down from the roof.’
‘How do the doors unlock?’
‘Four-digit code here; face recognition inside.’
‘Any gate into the compound apart from this one?’
‘No.’
‘What about power? Could we cut it off?’
Genoud shook his head. ‘There are diesel generators around the back on the ground floor with enough fuel for forty-eight hours.’
‘Security?’
‘An alarm system. It’s all automatic. No personnel on the premises.’
‘How do we open the gates?’
‘The same code as the doors.’
‘Very well. Open them, please.’
He watched as Genoud keyed in the number. The gates did not respond. Genoud, grim-faced, tried a couple more times, with the same result. He sounded mystified. ‘This is the right code, I swear.’
Leclerc took hold of the bars. The barrier was immensely solid. It didn’t budge a millimetre. You could ram a truck at it and it would probably hold.
Quarry said, ‘Maybe Alex couldn’t get in either, in which case he won’t be there.’
‘Possibly, but it’s more likely he’s changed the code.’ A man with death fantasies locked in a building with a hundred litres of gasoline! Leclerc called out to his driver: ‘Make sure the fire department are bringing cutting equipment. And we’d better have an ambulance, just in case. Madame Hoffmann, will you see if you can speak to your husband and ask him not to do anything foolish?’
‘I’ll try.’
She pressed the entry buzzer. ‘Alex?’ she said softly. ‘Alex?’ She held her finger on the metal button, willing him to answer, pressing it again and again.
Hoffmann had just finished dousing the CPU room, the tape-robot cabinets and the fibre-optic trench with petrol when he heard the buzzer on the control console. He had a jerry can in either hand. His arms ached with the weight. Fuel had slopped over his boots and jeans. It had started to get noticeably hotter – somehow he must have managed to disable the power supply to the ventilation system. He was sweating. On CNBC the headline was ‘DOW DOWN MORE THAN 300 POINTS’. He set the canisters beside the console and inspected the security monitors. By
