Creating flows of interpersonal bits: the automation of the London Stock Exchange, 1955-1990

forthcoming, 'Economy & Society'

This article deals with the concept of market information. In particular, it argues that references to the so-called conduit metaphor, which represents markets as a series of information flows, hide the localized, historically contingent and materially mediated practices of the economy. Following the tradition of the performative theory of social institutions, this article argues that the specific meaning of ‘market information’ and its concrete manifestations (e.g. prices) depend on the sociotechnical character of the calculative practices through which market participants orient their economic actions. The point is illustrated through a historical reconstruction of the introduction of price and quote dissemination technologies in the London Stock Exchange between 1955 and 1990. By highlighting the historical and technological contingency of prices, the case of the London Stock Exchange shows that it is impossible to provide a universally and temporally invariant definition of market information.

The House, Automated: the Digitalization of the London Stock Exchange, c. 1969-1992

in 'Technological Innovation in Finance: Moneymen and their Dream Machines', ed. Batiz-Lazo, B; Maixe-Altes, C; and Thomes, P.

This article is concerned with the technological history of the London Stock Exchange between c. 1969 and 1992. By exploring the development of the Stock Exchange’s market information systems, this chapter presents an illustration of the introduction of digital technologies to corporate finance. By analyzing the Stock Exchange’s development efforts, this chapter forwards an important lesson on technological change in finance. In particular, it demonstrates that technological change did not result from the passive use of digital technologies in increasing economic efficiencies. Rather, change came from a process of organizational learning and co-adaptation that was associated to the implementation, maintenance and updating of market technologies in relation to pre-existing organizational imperatives.

Trillions out of ones and zeros: the sociology of finance in the digital age

forthcoming in Prior, N. and Orton-Johnson, K. (eds) 'Rethinking sociology in the digital age'

This chapter has two objectives. The first is descriptive. Specifically, the it introduce the reader to some of the changes that have defined the sociology of finance from the early twentieth century to the present day. This chapter therefore seeks to emphasize the different waves of scholarship that followed the engagement of sociologists in matters of finance. The second objective, however, works at the level of reflection: it aims to highlight the fact that the sociological gaze is as much a prisoner of time and space, culture and contingency, as its objects of analysis. The sociology of finance, hence, is a mirror of our sociological present, of our enchantment or disenchantment with technology, and of our imagined pasts and promised futures. The waves that defined the sociological literature on finance are not merely the product of new sociological 'discoveries'. They are, fundamentally, a measure of the re-evaluation of our human condition.

How much for the Michelangelo? Valuation, commoditisation and finitism in the secondary art market

forthcoming, 'Cultural Sociology'

A drawing by Michelangelo exists in two different, rhetorically segregated worlds. On the one hand, it is a priceless cultural object that embodies a piece of the aesthetic history of a particular time and culture. Yet on the other hand, it is a quantifiable commodity whose market price exists and is determined at auction. Here, the auction house, as a component of the secondary art market, is portrayed as straddling between the ‘poles’ of economic and social life. Relying on the work of Michel Callon and Barry Barnes, commoditisation is presented as a process through which symbolic, economic and cultural values are shaped and reinforced. In particular, the finitist calculative practices associated to commoditisation (through the generation of estimated auction prices) are presented as being responsible for reproducing the secondary art market and the aesthetic judgements on which it is based.

4000 Miles of Separation: Financial Economics across the Atlantic, 1900-1970

This article explores the history of the disciplinary development of financial economics in the United Kingdom, based on an analysis of the academic scholarship published in Britain and the United States between 1900 and 1970. The rationale of this study derives from the fact that although several prominent authors have studied the emergence and development of financial economics, most of the literature concentrates on the events that unfolded in the United States, the country often presented as the birthplace of the field. The history of financial economics in the United Kingdom is therefore left unattended, reduced to a mere corollary of America. This article argues, however, that the constitution of financial economics as a mainstream form of economic science in Britain was mediated by numerous local factors. In particular, although influenced by the American scholarship, the developmental path followed by this field in the United Kingdom was shaped by pre-existing traditions of British economic thought and a particular conceptualization of information and its role in the marketplace.

Mapping nanotechnology across the Atlantic: Some (tentative) lessons for the future of nanotechnology in Latin America

This paper is a tentative exploration of the institutionally and discursively distinct forms of nanotechnology invoked in the United States, Europe and Latin America. In assessing the patterns of nanotechnology on both sides of the Atlantic, it identifies this field as a hybrid category, combining forms of social reflexivity, industrial organization, and the localized histories of research and development. It is argued that such patterns are only understood by rendering nanotechnology as a category used by actors rather than as a solid core of technical and cognitive competencies. Some implications of holding this view are drawn for Latin America.

Nanotechnology and the International Regime on Chemical and Biological Weapons

published in 'Nanotechnology, Law & Business' Vol 2, No. 1

The international control regime on chemical and biological weapons (“CBWs”) is dependent on the state of scientific progress. Nanotechnology threatens to undermine this regime by allowing the development of a new generation of weapons potentially undetectable under the current international arms control and verification regimes. In particular, nanotechnology can facilitate weapons based on enhanced delivery mechanisms for toxic substances, on tailored chemical compounds capable to targeting specific physiological functions, and on complex multilayered stealth designs. In this article, Professor Pardo-Guerra and his colleague present a brief overview of the challenges posed by nanotechnology to the current CBW regime and offer some ideas on how to avoid the proliferation of CBWs based on nanotechnology.

Adaptation in the Presence of Exogeneous Information in an Artificial Financial Market

Lecture Notes in Computer Science - MICAI 2004: Advances in Artificial Intelligence

In recent years, agent-based computational models have been used to study financial markets. One of the most interesting elements involved in these studies is the process of learning, in which market participants try to obtain information from the market in order to improve their strategies and hence increase their profits. While in other papers it has been shown how this learning process is determined by factors such as the adaptation period, the composition of the market and the intensity of the signals that an agent can perceive, in this paper we shall discuss the effect of external information in the learning process in an artificial financial market (AFM). In particular, we will analyze the case when external information is such that it forces all participants to randomly revise their expectations of the future. Even though AMFs usually use sophisticated artificial intelligence techniques, in this study we show how interesting results can be obtained using a quite elementary genetic algorithm.

A New Measure of Market Inefficiency

with Christopher R. Stephens, H.A. Benink & Jose Luis Gordillo

An oft stated corrollary, sometimes taken as its definition, of the Efficient Markets Hypothesis is that in an efficient market it should not be possible to systematically make excess or abnormal returns. This begs the question of excess or abnormal relative to what? Traditional benchmarks either fail to distinguish between trading returns and market returns, or are dependent on an associated asset pricing model, thus leading to the joint-hypothesis problem. In this paper we discuss a purely empirical measure - Excess Trading Returns - derived from the difference in profits associated with an agent portfolio where one or more trades were executed relative to a Buy-and-Hold portfolio where they were not, the Buy-and-Hold benchmark being dynamic and/or unique to the agent. With this measure in hand we introduce the relative inefficiency associated with a pair of agents, agent groups or trading strategies and from this define an Inefficiency Matrix that can provide a complete empirical characterization of the inefficiencies inherent in an entire market.

Market Efficiency and Learning in an Artificial Stock Market: A Perspective from Neo-Austrian Economics

with H.A. Benink, Jose Luis Gordillo, & Christopher R. Stephens

An agent-based artificial financial market (AFM) is used to study market efficiency and learning in the context of the Neo-Austrian economic paradigm. Efficiency is defined in terms of the excess profits associated with different trading strategies, where excess is defined relative to a dynamic buy and hold benchmark in order to make a clean separation between trading gains and market gains. We define an Inefficiency matrix that takes into account the difference in excess profits of one trading strategy versus another (signal) relative to the standard error of those profits (noise) and use this statistical measure to gauge the degree of market efficiency. A one-parameter family of trading strategies is considered, the value of the parameter measuring the relative informational advantage of one strategy versus another. Efficiency is then investigated in terms of the composition of the market defined in terms of the relative proportions of traders using a particular strategy and the parameter values associated with the strategies. We show that markets are more efficient when informational advantages are small (small signal) and when there are many coexisting signals. Learning is introduced by considering copycat traders that learn the relative values of the different strategies in the market and copy the most successful one. We show how such learning leads to a more informationally efficient market but can also lead to a less efficient market as measured in terms of excess profits. It is also shown how the presence of exogeneous information shocks that change trader expectations increases efficiency and complicates the inference problem of copycats.