How to recognize opportunities: Heterarchical search in a Wall Street trading room

Our task in this paper is to analyze the organization of trading in the era of quantitative finance. To do so, we conduct an ethnography of arbitrage, the trading strategy that best exemplifies finance in the wake of the quantitative revolution. In contrast to value and momentum investing, we argue, arbitrage involves an art of association - the construction of equivalence (comparability) of properties across different assets. In place of essential or relationa l characteristics, the peculiar valuation that takes place in arbitrage is based on an operation that makes something the measure of something else - associating securities to each other. The process of recognizing opportunities and the practices of making novel associations are shaped by the specific socio-spatial and socio-technical configurations of the trading room. Calculation is distributed across persons and instruments as the trading room organizes interaction among diverse principles of valuation.Arbitrage, trading, heterarchy

Resolving identities: Successive crises in a trading room after 9/11

How do organizations cope with extreme uncertainty? The existing literature is divided on this issue: some argue that organizations deal best with uncertainty in the environment by reproducing it in the organization, whereas others contend that the orga nization should be protected from the environment. In this paper we study the case of a Wall Street investment bank that lost its entire office and trading technology in the terrorist attack of September 11 th. The traders survived, but were forced to relocate to a makeshift trading room in New Jersey. During the six months the traders spent outside New York City, they had to deal with fears and insecurities inside the company as well as outside it: anxiety about additional attacks, questions of professional identity, doubts about the future of the firm, and ambiguities about the future re-location of the trading room. The firm overcame these uncertainties by protecting the traders’ identities and their ability to engage in sensemaking. The organization held together through a leadership style that managed ambiguities and created the conditions for new solutions to emerge.Organizational responsiveness, uncertainty, september 11th

How to stay on top of online education: Lessons from the New York Stock Exchange.

Daniel Beunza looks at how universities can continue to stay on top of technological change in the face of mounting start-up competition and debilitating institutional inertia. Drawing on his research on the transition to algorithmic trading at the New York Stock Exchange, Beunza argues that in order to have lasting success, online education and technology-mediated learning must be designed to complement rather than replace existing processes

Why bankers need management

Imagine a world where financial institutions are characterised by pay proposals that break the cycle of pay inflation; by traders enjoying long careers within one organisation and by senior management adopting a pragmatic attitude to risk. My guess is that you can’t. But it’s difficult to reflect on the stereotype of the banker as anything other than reckless and self-motivated when this character has been affirmed in popular culture over the past 30 years. Two of the most successful films about the financial industry, Wall Street (1987) and The Wolf of Wall Street (2013), depict traders performing shady and often illegal deals that are motivated by a ‘greed is good’ philosophy, conducted within a workplace that isn’t really like a workplace at all, where HR policies only exist to perpetuate individual wealth and materialistic need

Where do electronic markets come from? Regulation and the transformation of financial exchanges

The practices of high-frequency trading (HFT) are dependent on automated financial markets, especially those produced by securities exchanges electronically interconnected with competing exchanges. How did this infrastructural and organizational state of affairs come to be? Employing the conceptual distinction between fixed-role and switch-role markets, we analyse the discourse surrounding the design and eventual approval of the Securities and Exchange Commission’s Regulation of Exchanges and Alternative Trading Systems (Reg ATS). We find that the disruption of the exchange industry at the hands of automated markets was produced through an interweaving of both technological and political change. This processual redefinition of the ‘exchange’, in addition, may provide a suggestive precedent for understanding contemporary regulatory crises generated by other digital marketplace platforms

Impersonal efficiency and the dangers of a fully automated securities exchange

This report identifies impersonal efficiency as a driver of market automation during the past four decades, and speculates about the future problems it might pose. The ideology of impersonal efficiency is rooted in a mistrust of financial intermediaries such as floor brokers and specialists. Impersonal efficiency has guided the development of market automation towards transparency and impersonality, at the expense of human trading floors. The result has been an erosion of the informal norms and human judgment that characterize less anonymous markets. We call impersonal efficiency an ideology because we do not think that impersonal markets are always superior to markets built on social ties. This report traces the historical origins of this ideology, considers the problems it has already created in the recent Flash Crash of 2010, and asks what potential risks it might pose in the future

Creating Common Ground: A Communicative Action Model of Dialogue in Shareholder Engagement

Despite growing empirical evidence on the effectiveness of dialogue between activists and corporations in stakeholder engagement, scholars have not fully accounted for the mechanisms that explain its success. We address this gap by leveraging Habermas’s theory of communicative action. In our longitudinal qualitative study, we explore the dialogue on climate change between ICCR, a coalition of faith-based investors, Ford and General Motors. We find that communicative action can emerge from strategic action as a result of three cycles of interaction: establishing dialogue, framing, and deliberation. Our study contributes to the literature on shareholder engagement by integrating communicative and strategic action, thereby offering a new interpretation of how reputational threat and dialogue come together to produce a common ground between activists and companie

Testimonis

http://www.theses.com/idx/docs/pdfs/32/32-9990.pd

Blended automation: integrating algorithms on the floor of the New York Stock Exchange

The recent automation of the American stock market has replaced floor intermediaries with trading algorithms, calling into question the sociological claim that markets are structured by networks of intermediaries. Our study examines the social nature of markets in automated settings with an inductive, qualitative study of the automation of the NYSE during the period 2003-12. It proposes the concept of blended automation to denote an automation design that preserves the social structure of a market. Our analysis of the Flash Crash of 2010 suggests that such design offers greater resilience to economic shocks. Our study contributes to the literature on technology in organizations by characterizing a novel automation design that reconciles technology with social relations, and contributes to economic sociology by outlining how automated markets can remain socially structured, pointing to role of politics, ideology and design in market automation