aircannonsinc Chapter 207 Ghost Algorithm
Chapter 207 Ghost Algorithm
(Since this chapter is less than 4000 words, there will be another chapter tonight.)
Early November 1989.
Shinbashi, Minato Ward, Tokyo.
The core computer room on the second basement floor of the Saionji Intelligence System (SIS) headquarters building.
A massive industrial-grade exhaust fan hummed low and deep in the ceiling, continuously drawing away the ozone odor emitted by hundreds of running servers. A constant temperature and humidity system kept the room temperature locked at a mere 22 degrees Celsius. Rows of black server racks had countless indicator lights flashing alternately in the dim environment, casting flickering light on the gleaming anti-static floor.
Saionji Satsuki sat in a large leather swivel chair.
Today she wore a minimalist off-white turtleneck cashmere sweater, her long hair pulled back with a dark blue tortoiseshell hairpin. In her hand she held a bone china teacup, her fingertips gently tracing the rim.
On the edge of the control panel, the red encrypted telephone indicator light with its complex knobs began to flash rapidly.
Satsuki extended her free left hand and pressed the hands-free button.
"Boss." Frank's slightly hoarse voice came through the speaker. The signal from the transoceanic submarine fiber optic cable carried an extremely subtle background noise.
"The results of the initial small-scale position building are in. The market's reaction to these deep out-of-the-money put options is indeed very slow. Market makers are practically dumping these contracts."
Frank paused for a moment on the other end, the sound of him swallowing being amplified by the microphone.
"We're currently facing some physical resistance. David's actuarial team just submitted their execution report. Traditional manual order splitting by traders is too slow. Furthermore, professional traders on Wall Street have subconscious, ineradicable behavioral habits."
"They prefer to input integers, like ten lots or fifty lots. Their order placement intervals also exhibit clear circadian rhythms." Frank's speech quickened, revealing a hint of anxiety. "A dozen traders simultaneously typing these commands might be safe in the short term. But over time, this human-like trading frequency will create a highly overlapping waveform in the exchange's underlying data pool. Quantitative models from Goldman Sachs or Morgan Stanley can easily detect this artificially created 'heartbeat.'"
Satsuki listened quietly. She picked up her teacup and took a small sip of warm black tea.
"Then cut off manual operation." Satsuki's voice was clear and unhurried. "Let the machines do the work. Keep the connection going, Frank."
She turned her head slightly, her gaze falling on Shimomura Tsutomu at the other end of the control panel.
This genius hacker, who was being "kept" by the Saionji family at a high salary, was sitting cross-legged in an ergonomic chair with one armrest broken off. He was wearing a faded gray hooded sweatshirt and chewing a piece of gum vigorously.
Beside him, Sayuri, dressed in a dark maid uniform, gently placed a freshly brewed espresso in his hand.
"Shimomura." Satsuki looked at him. "How long will it take you to write a fully automated high-frequency order splitting script for the trading interface in New York?"
Shimomura Tsutomu stopped chewing. He reached for the espresso, tilted his head back, and drank it all in one gulp. The bitter liquid stimulated his nerves, and excitement gradually appeared in his eyes.
Two hours.
He handed the empty coffee cup back to Xiaobaihe, interlaced his fingers, and forcefully bent them outwards, making a "crackling" sound from his knuckles.
"A standard TWAP or VWAP algorithm can be written in five minutes. However, pseudo-randomness with human logic is very easy to reverse track. Wall Street mathematicians can simply pull up a timeline and deduce our total amount of funds."
Tsutomu Shimomura turned to face the heavily modified Sun workstation, his hands hovering above the mechanical keyboard.
"I need some time to connect to the weather monitoring radar on the top of this building. I need to extract the tiny fluctuations in electromagnetic noise in the atmosphere and use this completely unpredictable physical entropy value as the seed for generating truly random numbers at the bottom of the algorithm."
"Use the absolute disorder of nature to shred your money-grubbing dollars."
The sound of keyboard typing suddenly rang out.
"Crackling and popping—"
It was like a sudden downpour hitting the cold floor of the server room.
"Boss, let the countdown begin. I'm going to make those traders in New York completely unemployed."
Satsuki nodded slightly. She leaned back in her leather chair, her gaze calmly fixed on the rapidly scrolling C code on the screen.
……
Two hours and forty-five minutes later.
The compilation progress bar finally reached 100%. A green pop-up appeared on the screen.
Shimomura Tsutomu popped a chewing gum bubble.
"Packaging complete. An executable file for a UNIX-based system. I'm now sending it to New York via SIS's encrypted channel."
He pressed the Enter key. The indicator light, signifying data transmission, began flashing rapidly on the router panel.
The other side of the earth.
Midtown Manhattan, New York.
Inside SA Investment's trading floor, the central air conditioning blew cool air onto rows of flashing Bloomberg terminals.
Frank and chief actuary David stood in front of the control panel.
On the screen, a package named "ghost_protocol.tar.Z" lies quietly in the receiving folder.
David wiped the sweat from his brow and typed the decompression password on the keyboard.
"David, transfer all trading permissions for those one hundred umbrella trust accounts to this program."
Frank, with one hand in his suit trouser pocket, gave the order.
David swallowed hard.
Giving complete control of billions of dollars in cash to a piece of newly transmitted foreign code was a serious violation of his professional instincts as an actuary.
But there was no way around it; it was an order from the parent company, and they had to carry it out.
He pressed the execute button.
Inside the hall, the price quotation terminals, originally controlled by dozens of traders, were instantly taken over. The manual input boxes were forcibly locked. A black-and-green code interface took over all hardware interfaces.
The algorithm has started.
Those billions of dollars in short-selling capital were mercilessly sent into the meat grinder by this program called "Ghost" in milliseconds.
The massive sums of money were shredded by an extremely brute-force algorithm.
Three lots, seven lots, two lots, eleven lots. These extremely fragmented buy orders, carrying forward put option codes from the Chicago Mercantile Exchange (CME) and the Singapore International Monetary Exchange (SIMEX), are tossed into the global financial network like specks of dust.
They make no sense whatsoever. Sometimes they fire a dozen or so messages in a burst within three seconds, and other times they fall silent for several minutes. They are randomly routed to different brokerage channels located in London, Frankfurt, and Hong Kong.
It simulates the behavior of small-scale, highly amateurish retail investors in time zones around the world as much as possible.
Inside the New York trading floor, the sound of manual keyboard typing had completely disappeared. Dozens of traders sat blankly in their chairs, staring at the screens in front of them.
The eerie green data stream pulsed and alternated wildly on the screen.
This massive amount of capital, concealed by algorithms, is silently devouring all the cheap, worthless Japanese stock put options on the market with a mechanical and absolutely unstoppable force.
……
2:15 PM.
Broadway, New York, USA.
The headquarters of a top Wall Street investment bank.
Inside the risk control center lobby, the ringing of telephones mingled with the shouts of traders.
Robert, a senior risk controller, sat in front of a state-of-the-art analytics terminal.
His desk was piled high with printed options volatility charts, and a cup of cold Americano sat beside him.
"Beep—" A yellow warning box popped up in the lower right corner of the terminal screen.
[Anomaly Monitoring: Nikkei 225 forward put option (December 1990 delivery) has underlying trading volume deviating from the 12-day moving average.]
Robert frowned slightly.
He put down his sandwich and wiped the grease from his fingertips with a tissue. He gripped the mouse with his right hand and double-clicked to open the warning box.
The screen displays the Level 2 data.
Robert's eyes swept quickly across the densely packed transaction records.
The Japanese stock market recently surged to over 35,000 points, with the entire market engaging in a frenzy of buying call options. At such times, an unusually large increase in the trading volume of long-term put options is highly likely due to large institutions engaging in directional hedging, or establishing positions based on prior knowledge of some negative macroeconomic news.
He pulled up a fund tracing analysis tool, attempting to piece together a complete profile of these transaction volumes.
The search progress bar advances on the screen.
As Robert watched, he picked up the cup of cold coffee, took a sip, and forced himself to stay awake.
The analysis results popped up.
A hint of confusion flashed in his eyes.
The expected large transaction records did not appear on the screen, and there were not even any medium-sized buy orders exceeding fifty lots.
Everywhere you look, there are extremely fragmented particles.
Both hands came from a little-known retail brokerage firm in London...
The five lots came from a local Chicago agricultural hedge fund account...
The seventh source is a private wealth management platform from Geneva...
The trading hours were completely irregular, and the price ranges were extremely dispersed, showing none of the concentrated buying activity typically seen when large institutional funds enter the market. The already low option premiums didn't even see any substantial increase despite the surge in trading volume.
"Robert, have you spotted any big fish?" The risk control manager asked casually as he passed by Robert's workstation, a report in hand.
Robert shook his head, scrolling his finger across the mouse wheel as he flipped through a few more pages of transaction records. It was still the same fragmented transactions.
"It's nothing." Robert's voice was a little dry as he rubbed his sore eyes. "There's been a slight increase in underlying trading volume for Nikkei forward put options. I checked the transaction details, and they're all small buy orders from retail channels around the world."
The risk control manager glanced at the data distribution on the screen and chuckled dismissively.
"The Japanese stock market has gone too far, and there will always be some small funds or retail investors with a fear of heights who will buy a few deep out-of-the-money put options as a hedge. This kind of daily, small-scale hedging behavior happens every day and doesn't make much of a splash."
"Focus your attention back on the yen-dollar exchange rate fluctuations. That's the main battleground." The supervisor patted Robert on the shoulder and turned to walk away.
"Understood." Robert gripped the mouse again.
He looked at the green purchase data on the screen, which was still fluctuating randomly and each transaction only had two or three transactions.
Reason told him that these fragmented transactions scattered around the world could not possibly have a unified command center at the physical level. No institution would go through the trouble of using hundreds of international channels just to buy a few cheap option premiums.
Oh well, the world is so big, there are all kinds of people.
He moved the cursor to the close button in the upper right corner of the yellow warning box.
The index finger twitches slightly.
"Click".
The mouse clicked with a crisp, soft sound.
The yellow warning pop-up has been turned off.
The monitor was once again covered by a full-screen stream of green data, symbolizing a rising stock market.