Untitled - socium.ge
Share Embed Flag
Download ePaper

Untitled - socium.ge

Untitled - socium.ge Untitled - socium.ge

socium.ge
10.07.2015 Views

information he receives will be seconds behind at best. That outdated informationis a representation of a temporal market reality that no longer exists.Social networks complicate this understanding of the market. Thesenetworks stretch the market over time. They create agreements between individualsabout the shape of the market, even though the CBOT defines themarket as a phenomenon confined to the daily trade. The formation of adefined social space within the pit creates problems for the designers andmanagers who are responsible for creating and maintaining an “efficient”marketplace. The social understandings of time and space in the market underminethe technological design of the market. The competing notions of spaceand time cannot be reconciled easily.SplinteringTechnology in financial networks 203Despite the temporal and spatial centrality of the pit, the physical proximity oftraders creates splintering. Strategies for profit-making in the pit result in thespatial and social fragmentation of the market. The largest pit at the CBOTholds 600 traders. In an arena of such vast size, not all traders are available ata single time. Traders can use their own discretion when identifying their tradingpartners. Traders use this judgment to create protected spaces of exchange,or neighborhoods. In these enclaves, traders of similar skills and risk-takingtastes gather in a single area of the pit to support each other’s labor. Brokersand individual traders of great influence encourage younger traders who showpromise to stand close to them in the pit. This proximity allows the influentialspeculator to do business with the traders of his choice, establishing centers ofprofitability within the supposedly open marketplace. 11 Although the pit wascreated to centralize and unify the market, the social network of the pit isarranged in clusters that trade more with one another and less with thoseoutside their “neighborhood.”The stepped structure of the pit also creates a problem for traders who practicea technique called spreading between contracts. These speculators – alsocalled yield-curve traders – exploit fluctuations in the relationship betweenprices in the 30, 10, and 5-year treasury futures. For a spreader based primarilyin the 10-year pit the key profit is to have instant access to trade in the 5-year notes. Spreaders dominate an area where these traders have anuninterrupted view of the 5-year pit. The pit is also divided into areas accordingto the expiration month of the contract. Traders who deal in “front month”contracts – the futures contract that will expire next – gather in one area of thepit. Traders who trade the middle and back month contracts gather in distinctareas. The shape of the pit and the arrangement of pits on the trading floorcondition the physical arrangement of the social network of traders.CBOT dealers have been plying their trade in pits for 155 years. Until

204 Caitlin Zaloomrecently, the logic of the trading nexus has been unchallenged. Changes to thepit technology have focused on the delivery of information to the pit and thedistribution of commodity prices that are made there. From chalkboards andtelegraphs to telephone, digital order books, and electronic screens, informationtechnology has been used to augment the trading nexus.FROM NEXUS TO NETWORKAfter a century and a half of dominance, the pit is now giving way to onlineforms of trading. Digital markets are obviating the CBOT nexus by establishingelectronic networks that stretch over the globe. This new market form linksdispersed traders into a unified, but decentralized, market. This is not,however, a simple reproduction or rationalization of the marketplace. Thesedigital platforms create new orientations to space and time that define themarket environment and the information available to traders. Where the tradingpit was designed to unify the market in space and time, electronic futurestrading creates a technological network of traders that share time but neitherspace nor relationships. 12 These network technologies reconfigure the spatialand temporal relationships of the trader to the market, and, in turn, reshapetheir strategies for information gathering.SpaceElectronic technologies create a global scale for the marketplace. Instead of anexus form, where information and traders converge in a central location,connections between traders are stretched into globe-spanning networks. In1999, the CBOT and its partner, the German-Swiss exchange Eurex, launcheda common trading platform on which any member of either exchange couldtrade the other’s products. The exchanges distributed the new screens widelywith particular concentrations in Chicago, London, and Frankfurt. A centralserver located in Chicago for American Treasury futures and Frankfurt forGerman Treasury futures matches trades and redistributes the profit and lossinformation to the traders’ desks around the world.The new electronic network reorganizes space and time in two importantways. First, the electronic network separates physical and social space. Therationale for creating electronic markets was built on the logic of efficiency.For clients of the exchanges, traders and their social networks are seen as apotentially costly impediment between the clients’ strategies and the market.The technological possibility of more direct contact with the market drivesmanagers and designers to create new technological platforms. 13 These platformsboth unify and spread access to the market. The trading screen dissolves

204 Caitlin Zaloomrecently, the logic of the trading nexus has been unchallen<strong>ge</strong>d. Chan<strong>ge</strong>s to thepit technology have focused on the delivery of information to the pit and thedistribution of commodity prices that are made there. From chalkboards andtelegraphs to telephone, digital order books, and electronic screens, informationtechnology has been used to augment the trading nexus.FROM NEXUS TO NETWORKAfter a century and a half of dominance, the pit is now giving way to onlineforms of trading. Digital markets are obviating the CBOT nexus by establishin<strong>ge</strong>lectronic networks that stretch over the globe. This new market form linksdispersed traders into a unified, but decentralized, market. This is not,however, a simple reproduction or rationalization of the marketplace. Thesedigital platforms create new orientations to space and time that define themarket environment and the information available to traders. Where the tradingpit was designed to unify the market in space and time, electronic futurestrading creates a technological network of traders that share time but neitherspace nor relationships. 12 These network technologies reconfigure the spatialand temporal relationships of the trader to the market, and, in turn, reshapetheir strategies for information gathering.SpaceElectronic technologies create a global scale for the marketplace. Instead of anexus form, where information and traders conver<strong>ge</strong> in a central location,connections between traders are stretched into globe-spanning networks. In1999, the CBOT and its partner, the German-Swiss exchan<strong>ge</strong> Eurex, launcheda common trading platform on which any member of either exchan<strong>ge</strong> couldtrade the other’s products. The exchan<strong>ge</strong>s distributed the new screens widelywith particular concentrations in Chicago, London, and Frankfurt. A centralserver located in Chicago for American Treasury futures and Frankfurt forGerman Treasury futures matches trades and redistributes the profit and lossinformation to the traders’ desks around the world.The new electronic network reorganizes space and time in two importantways. First, the electronic network separates physical and social space. Therationale for creating electronic markets was built on the logic of efficiency.For clients of the exchan<strong>ge</strong>s, traders and their social networks are seen as apotentially costly impediment between the clients’ strategies and the market.The technological possibility of more direct contact with the market drivesmana<strong>ge</strong>rs and designers to create new technological platforms. 13 These platformsboth unify and spread access to the market. The trading screen dissolves

logo

products

Resources

Company

Terms of service
Privacy policy
Cookie policy
Cookie settings
Imprint
Change language
Made with love in Switzerland
© 2024 Yumpu.com all rights reserved

Hooray! Your file is uploaded and ready to be published.

Saved successfully!

Ooh no, something went wrong!