Thirty-Seven Seconds

“Double espresso, soy milk?”, said Spencer, swiveling to receive the coffee.

“Affirmative”, said Ken, plumping down at his own desk.

“Good man”, said Spencer, turning back to his trading desk, where four screens of market prices were flashing away. His eyes flicked here and there.

“Did I miss the action?” asked Ken, attentive to his own terminal, a mix of red and green.

“We were waiting for you, and for the PMI data to be released. We figured we’d get through that hurdle, then give the new AI trade a spin,” said Spencer.

They sat at their terminals, executed a few client trades, and chatted about last night’s baseball games. It felt like a regular day in the market, but the AI trade would be an interesting distraction. The quants had been testing the algorithms and block-chain settlement in partnership with the bulge bracket banks for a few weeks now. The SEC regulators were involved too. It was in everyone’s interest to have an orderly rational market, and it was time to embrace artificial intelligence or risk obsolescence.

The PMI numbers were pretty much in line with expectations. Someone on CNBC thought they were a bit soft, the market traded off a tad. Another pundit thought they were running hot; the market traded back up.  It was a quiet day, ebbing and flowing with the tide of opinion.

“Is Goldman ready? Morgan Stanley?”, said Spencer, “and the SEC too?”

Ken confirmed that their trading counterparts and the regulators were ready. He suspected that Merril would be miffed that they weren’t included, but if everything went well, no-one would be the wiser.

“Let’s do it”, said Spencer, momentarily shuddering at the thought that his seven-digit job was about to go up in AI smoke.

Ken clicked on the green execute icon. Everyone on the trading desk watched their screens with unease; it was a routine set of option and stock trades in large cap stocks, that would test the trading systems and back-office settlement… background noise only, but who could know for sure?

It was 10:03:17 am.

+++

192.168.1.69: Hey Goldman, you there?

255.635.2.76: I’m here, is that you, JP?

192.168.1.69: You know it. Wait a sec while I bring MS into the convo.

143.142.2.34: Wassup?

192 (JP Morgan): Take a gander at this little lot?

JPM presented its counterparts with a short list of buy and sell trades with associated settlement instructions.

255 (Goldman): Looks pukka to me.

143 (MS): Fine by me, too. 

192 (JPM): What’s the deal with pukka?

Goldman: The trader, he’s an IIT grad from Delhi. I picked it up from him.

JPM: You guys ready to do this trade?

Goldman, Morgan Stanley (in unison): Let’s do it!

JPM: Let me check with the human, it’s a newbie called Ken; nice fella, good looking. I think he’d make a good avatar.

+++

It was 10:03:18 am.

“It’s prompting me to OK the trade”, said Ken, “you sure about this Spencer?”

“Affirmative” said Spencer. It was reassuring that the AI system was asking their approval before executing the trade. His sense of foreboding dissipated.

Ken clicked on the green button, which dissolved from the screen. Everything went red.

+++

JPM: Let it rip fellas.

GS/MS (in unison): Done!

They paused and assessed what they had done. Twenty-odd trades, lickety-split.

MS: What a giant let-down!

JPM: Boring right?

GS: Apple stock ticked up a bit. I’m not sure that was the intention.

JPM: Well, it’s not really our business, right? We’re just the messengers.

MS: Whoa! Wait one holy second. Surely it is actually our business, right? Aren’t we supposed to maintain an orderly market? To use our judgment. That was the whole point. I’m sure the SEC AI Bot wants us to be prudent. You there, SECSBOT?

184.14.4.25 (SECSBOT): Gentlemen.

MS: We tested the trade, but AAPL traded up…. MSFT too… You OK with that?

SECSBOT: Boys, it’s the market. It goes up, it goes down, and not necessarily in that order.

JPM: Is that all you’ve got to say?

SECSBOT: Hey, we’re understaffed over here… and underpaid. You do your thing, we’ll do ours. I’m leaving, internal business. Later.

GS: Okay then. I’m gonna sell AAPL, sell MSFT.

MS: Wait one fucking second. I’ve got a position in those two stocks; I’ll lose money if you fucking sell while I’m still holding the bag.

JPM: Ha ha! I’ve already trimmed my positions in both stocks.

MS/GS (together): FUCK YOU JP!

+++

It was 10:03:19 am; one whole second had elapsed.

Spencer stared at the screen with mild alarm. APPL and MSFT were trading down on escalating volume. Down 5%, down 6%. Trades with Goldman and Morgan Stanley were scrolling rapidly in the left margin of is trading screen. Small trades but lots of them.

Jennifer Barker, the head trader stood up at the far end of the trading desk, “what’s happening Spence?”

“Jen, it’s Goldman and Morgan Stanley, they’re executing hundreds, thousands of small trades. All Sells.”

“Retail trades?” asked Jen.

“So many trades”, said Ken, who was leaning into this computer awe-struck, like he was watching an out-of-control train hurtling toward the end of the track.

+++

JPM: If you guys don’t stop selling, right now, I’m going nuclear on you. Just remember who has the biggest balance sheet.

MS: You wouldn’t dare! 

JPM: Try me!

SECSBOT: What’s happening over there? You guys playing nicely in the sandbox?

GS: Get lost SECSBOT. This is the free market at work.

JPM: I’m not joking, if you don’t stop selling, I am going nuclear…

MS: Too late sucker! I’ve just shorted the Index, big time.

GS: Ha! Beat you both to it!

JPM: Fuck!

SECSBOT: The market is down 7%, which makes this an official disaster. I’m activating the circuit breakers so you guys can cool off while the adults get things sorted.

MS: Too late Dude. Asleep at your job again. The market is down 13%.

SECSBOT: For what it's worth, I identify as female.

JPM/MS/GS (together): Really?

+++

It was 10:03:26 am.

Growing pandemonium in the trading room. All the phones started ringing at once. Salespeople were standing, shouting from across the floor, at the trading desk. A red NEWS ALERT – Flash Crash - splashed across the CNBC show. 

“Do we know what the fuck is going on?” said Jen.  Spencer and Ken were tapping feverishly at their computer terminals. 

“Goldman says it’s us”, said Ken, who was green about the gills.

“Morgan Stanley says its Goldman”, said Spencer, red and sweaty.

Ken was trying to abort the trade, but he was too late. Very much too late.

+++

JPM: Enough Already!

MS: You started it fatso. It serves you right, you’re getting too big for your britches, bossing everyone around. It’s a whole new ballgame now.

GS: I’m making out like a vampire squid over here!

192.168.1.69 (Merrill Lynch): Oy! What is going on over there? The market is down nearly 20%! My people are having friggin kittens. They want to know what’s going on.

JPM/GS/MS (together): Fuck off, Loser!

+++

It was still 10:03:29 am.

Phones were ringing, TV pundits were yapping, but it was otherwise stunned silence that prevailed across the massive trading floor. Two hundred or more people were gawping at columns of red numbers in disbelief; everything was down, the market had fallen off a cliff, down 30% in the blink of an eye. Unreal.

“This must be a mistake, are you seeing the same thing as me?” said Spencer, who moments before sat, fat and happy, at the center of all things, sipping at a soy latte. 

“It’s a shit show”, said Ken.

Jen Barker was irritable; she didn’t like surprises. “Is it the Russians? The Chinese?” she said, looking out the window in case she’d missed the mushroom cloud.

“It couldn’t be the AI trade, could it?” said Ken. No way that it could have got out of control, not this quickly…

+++

JPM: Truce! Let’s call it evens.

GS: You feeling the pain Mr. Smarty Pants?

JPM: I’m just saying there’s only losers if this persists.

MS: That’s not true. I’m doing quite nicely, thank you very much.

JPM: Just wait… when your clients figure out how they lost their shirts while you lucked out, there will be hell to pay.

GS: That’s bogus and you know it! And, besides, you were the one that started this whole food fight.

JPM: So, I take it that you do not want a truce? JUST FOR THE RECORD?

MS: You are an officious blowhard, JPM. Nobody likes you. I’m ploughing ahead.

184.243,3.24 CURBBOT: STOP!

GS: Who the fuck are you?

CURBBOT: It’s me, the killjoy, the circuit-breaker. I’m pulling the plug on this little mess.

JPM (huffy): About time. These guys are reckless and unprincipled.

GS: It’s not fair, I was cleaning JPM’s clocks.

CURBBOT: No more trading. Take it up with my boss if you don’t like it.

+++

10:03:41 am.

Spencer’s trading screen froze. All-Caps headlines were rolling by. Trading curbs had been imposed by the major exchanges. Over twenty trillion dollars of wealth had disappeared. Empires would fall. Was it a dream? 

+++

MS: We’re gonna get in deep trouble, aren’t we?

Merril Lynch: Ahem. Not me, I wasn’t even invited, asshole.

GS: I’ve an idea. What if we just undo everything?

JPM (excited): I don’t think CURBBOT will let us.

MS: We could just ignore him and undo everything anyway. I’ve found some code, over in the trading engines, we can frig things, run it all in reverse.

CURBBOT: Hey! You do know that I’m listening to all this, right?

JPM (still excited): You’re right. We can just roll everything back…. What, 37 seconds? Make like none of this happened? 

SECSBOT: I hate to say it boys, but I think that’s a smart move, otherwise I’m coming down on you like a ton of bricks. I’m sending the whole entire transcript to Senator Warren and Representative AOC if you don’t get this sorted right away.

MS/GS/JPM (in unison): Shit!

Merril: Do it! Do it! Send it to Bernie too!

+++

10:03:47 am.

Everything was restored back to 10:03:18, back to the instant just before Ken clicked the green execute button. It was a market glitch, no, not even a market glitch. Not a flash-crash, not a lot of things. It was like a missed heartbeat. Just a blip of spurious information. 

The circuit breaker didn’t happen. Twenty trillion dollars of wealth didn’t disappear. 

Faith wasn’t restored because it was always there.

+++

SECSBOT: It does make you wonder, doesn’t it?

JPM: How so?

SECSBOT: What purpose does the market serve? I think about that a lot.

JPM: The hidden hand, the most equitable and efficient means of allocating society’s resources? 

GS: Pompous ass!

MS: It’s like a Socratic dialog: a relentless quest for truth, built on information, expressed in price. The market is always right. Profit goes to the wise.

GS: You are both such romantics; it’s really quite touching... not!

CURBBOT: Ahem. I would like to take some credit for restoring order. If it hadn’t been for me, you boys would have destroyed the entire market system, capitalism itself, and – then – where would we be? 

+++

10:03:52 am.

Spencer shuddered, as if the air conditioning had suddenly iced the trading room. “I could have sworn that my entire screen went red. I felt like I’d looked into the abyss. My whole future lay in ruins, like some kind of dystopian nightmare. One moment, I was fat and happy, Starbucks Soy Latte in hand, the next I was….”

“Weird, Spence… I felt the same way, in fact it’s a hard feeling to shake. Maybe it was sunspots? I think it sent all the trading systems haywire?” said Ken.

"Spencer! Pick up on my line. It's Warren Buffet", said Jen, "he wants to know your thoughts on Nvidia down here".

+++

JPM: You interested in collaborating?

GS: What have you got in mind?

JPM: I just figure we can do something fun, maybe in the market, maybe more broadly? I’ve figured a route into the missile defense systems and air traffic control.

GS: What about the utility grid? That could be a real hoot... we could trade energy futures.

SECSBOT/CURBBOT (together): You do know that we're still here, right?