Wednesday 26 June 2013

Quantum Dawn 2: War on Wall Street

When Patrick stepped into his office at 8 am, all he had on his mind was the trading strategy he would be adopting for the day and the dinner at one of the most exclusive restaurants in New York that he had planned for his wife later that evening. As head trader of a fund which had recently raised $5 billion, life was good for Patrick. Little did he know that life was going to sucker punch him that very day.

With the daily morning meeting out of the way, Patrick proceeded to his array of 6 screens to begin implementing the strategy he had panned out earlier that day. The markets opened and he set out doing what he did best – making big fat wads of cash for his fund. Things began to look untoward inconspicuously enough, when he noticed what appeared to be an unusual lethargy in the markets. Soon, he noticed that his trades weren’t going through as fast as they ought to be. His was a world where millions could be made or lost in a matter of a fraction of a second; a few seconds could make or break his entire game plan. At 11:01, he called up his number two, Brian McPhee to check whether anyone else was experiencing the same anomalies. At precisely 11:02, all hell broke loose.

The market crashed in explicably, as if every stock in the world had jumped off a cliff. Gold and USD rates shot up while oil fell, leaving Eduardo screaming into the phone. As numbers in red started propping up all over his screens, he immediately started winding up his positions, all thoughts of the well-planned strategy gone out the window. All over the floor, his fellow traders were in a state of extreme panic –most screaming into their phones, while some just stared at their screens, transfixed.

At 11:06, every screen in the floor went blank as if someone had tripped a switch. As Patrick turned to look at Brian, his eyes said what his mouth couldn’t. Something was wrong – very, very wrong. This sort of stuff was not supposed to happen in real life...

No, I’m not writing a script for the next financial thriller movie, nor is this from some “non-technical must-read finance books”. Something of the sort is indeed about to happen very soon in real life. But, as something similar to a fire drill (sorry to let you down, apocalypse watchers). On June 28, Wall Street will be subjected to a simulated cyber attack designed to test the Street’s system readiness and response time in the event of all-out cyber warfare. The exercise has been code named "Quantum Dawn 2".

“During the exercise, which runs from 9 a.m. to 2:30 p.m. in New York, participants will receive blasts of vague and confusing information about what appears to be a hacker attack on fake trading and information platforms that are not plugged into actual markets. The participants may see “latency,” or unusual slowness, in trading, or viruses trying to invade the systems. They will also have to call one another to figure out what’s going on.”

The drill is being organized by the trade group SIFMA as a version 2.0 to the simulation held in 2011, Quantum Dawn. While the first version involved a cyber attack coordinated with armed gunmen running around lower Manhatten, Quantum Dawn 2 will see the participation of over 40 Wall Street firms along with government biggies like Department of Homeland Security, the Treasury Department, the Federal Reserve and the Securities and Exchange Commission.

And you thought finance was boring.

Click HERE to read more on Quantum Dawn 2. Click HERE to go to the press release by SIFMA.

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