The Fear Index

laughter. ‘Right then …’
    Hoffmann said, ‘Actually, there is one last thing, Hugo.’ Staring out across the upturned faces of his quants, he felt for the first time a sudden sense of comradeship. He had recruited every one of them. The team – the company – his creation: he guessed it might be a long while before he had another chance to speak to them collectively, if ever. ‘Can I just add something to that? It’s been, as some of you have probably guessed by now, an absolute bitch of a day. And whatever happens to me, I just want to tell you all – every one of you …’ He had to stop and swallow. To his horror he was welling up, his throat thick with emotion, his eyes brimming. He looked down at his feet, waiting until he had himself under control, then raised his head again. He had to rush to get through it or he would have broken down completely. ‘I simply want you to know I’m very proud of what we’ve done together here. It’s never been just about the money – certainly not for me and I believe not for most of you, either. So thanks. It’s meant a lot. That’s it.’
    There was no applause; simply mystification. Hoffmann stepped down from the chair. He could see Quarry looking at him in a strange way, although the CEO recovered quickly and called out, ‘All right, everyone, that’s the end of the pep talk. Back to your galleys, slaves, and start rowing. There’s a storm coming in.’
    As the quants began to move away, Quarry said to Hoffmann: ‘That sounded like a farewell speech.’
    ‘It wasn’t meant to.’
    ‘Well it did. What do you mean, whatever happens to you?’ But before Hoffmann could answer, someone called out, ‘Alex, have you got a second? We seem to have a problem here.’

16

    Intelligent life on a planet comes of age when it first works out the reason for its own existence .

    RICHARD DAWKINS, The Selfish Gene (1976)

    WHAT WAS OFFICIALLY logged as a ‘general system malfunction’ occurred at Hoffmann Investment Technologies at 7.00 p.m. Central European Time. At exactly the same moment, almost four thousand miles away, at 1.00 p.m. Eastern Standard Time, unusual activity was detected on the New York Stock Exchange. Several dozen stocks began to be affected by severe price volatility of such magnitude that it automatically triggered what are known as liquidity replenishment points, or LRPs. In her subsequent testimony to Congress, the chairman of the US Securities and Exchange Commission explained that

LRPs are best thought of as a ‘speed bump’ and are intended to dampen volatility in a given stock by temporarily converting from an automated market to a manual auction market when a price movement of sufficient size is reached. In such a case, trading on the NYSE in that stock will ‘go slow’ and pause for a time period to allow the Designated Market Maker to solicit additional liquidity before returning to an automated market . 1

    Still, it was only a technical intervention, and not unheard-of, and at this stage it was also relatively minor. Few in America paid much attention for the next half-hour, and certainly none of the quants at Hoffmann Investment Technologies was even aware of it.

    THE MAN WHO had called Hoffmann over to his six-screen array was an Oxford PhD named Croker, whom Hoffmann had recruited from the Rutherford Appleton Laboratory on the same trip that Gabrielle had hit upon the idea of making art out of body scans. Croker had been attempting to put a manual override on the algorithm in order to begin liquidating their massive position on the VIX, but the system had denied him authority.
    ‘Let me try,’ said Hoffmann. He took Croker’s place at the keyboard and entered his own password, which was supposed to give him unrestricted access to every part of VIXAL, but even his request for special operator privileges was turned down. He tried to conceal his fear.
    As Hoffmann clicked the mouse in vain and tried various other routes into the system, Quarry stood looking over his shoulder, together with van der Zyl and Ju-Long. He felt surprisingly calm; resigned, even. Part of him had always known this was going to happen, just as he always half-expected, every time he strapped himself into an aircraft, that he was going to die in a crash. The moment one surrendered oneself to a machine operated by someone else, one was acquiescing in one’s own doom. After a while he said, ‘I assume the nuclear option is just to unplug the