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Tools of the trade: the socio-technology of arbitrage in a Wall Street trading room

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Author Info

  • Daniel Beunza
  • David Stark

Abstract

To analyze the organization of trading in the era of quantitative finance 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 comparability across different assets. In place of essential or relational 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. Copyright 2004, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Industrial and Corporate Change.

Volume (Year): 13 (2004)
Issue (Month): 2 (April)
Pages: 369-400

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Handle: RePEc:oup:indcch:v:13:y:2004:i:2:p:369-400

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Cited by:
  1. Yuval Millo, 2007. "From green fields to green felt tables and back: the origin of index-based derivatives," LSE Research Online Documents on Economics 36124, London School of Economics and Political Science, LSE Library.
  2. Fligstein, Neil & Goldstein, Adam, 2012. "The Transformation of Mortgage Finance and the Industrial Roots of the Mortgage Meltdown," Institute for Research on Labor and Employment, Working Paper Series qt2zx8r7fb, Institute of Industrial Relations, UC Berkeley.
  3. Liliana Doganova & Marie Eyquem-Renault, 2009. "What do business models do? Narratives, calculation and market exploration," Post-Print halshs-00347615, HAL.
  4. Timothy C. Johnson, 2012. "Ethics and Finance: the role of mathematics," Papers 1210.5390, arXiv.org.
  5. Lenglet, Marc, 2011. "Conflicting Codes and Codings: How Algorithmic Trading Is Reshaping Financial Regulation," Economics Papers from University Paris Dauphine 123456789/11664, Paris Dauphine University.
  6. Lepratte, Leandro, 2011. "Sistemas sociotécnicos, innovación y desarrollo
    [Sociotechnical systems, innovation and development]
    ," MPRA Paper 33559, University Library of Munich, Germany.
  7. Anne Pezet & Jérémy Morales, 2010. "Les contrôleurs de gestion, « médiateurs » de la financiarisation," Post-Print halshs-00498673, HAL.
  8. Daniel Beunza Ibáñez & Raghu Garud, 2004. "Security analysts as frame-makers," Economics Working Papers 733, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2005.
  9. Kenneth Amaeshi, 2010. "Different Markets for Different Folks: Exploring the Challenges of Mainstreaming Responsible Investment Practices," Journal of Business Ethics, Springer, vol. 92(1), pages 41-56, April.
  10. Martha Poon, 2009. "From New Deal institutions to capital markets: commercial consumer risk scores and the making of subprime mortgage finance," Post-Print halshs-00359712, HAL.
  11. Hélène Rainelli-Le Montagner, 2008. "Finance d'entreprise:voix nouvelles et nouvelles voies," Revue Finance Contrôle Stratégie, revues.org, vol. 11(Special), pages 291-313, June.
  12. Yuval Millo & Donald MacKenzie, 2007. "Building a boundary object: the evolution of Financial Risk Management," LSE Research Online Documents on Economics 36530, London School of Economics and Political Science, LSE Library.
  13. Isabelle Huault & Hélène Rainelli-Weiss, 2013. "Is transparency a value on OTC markets? Using displacement to escape categorization," Working Papers halshs-00927090, HAL.
  14. Troy, Irene & Werle, Raymund, 2008. "Uncertainty and the market for patents," MPIfG Working Paper 08/2, Max Planck Institute for the Study of Societies.
  15. Kirschbaum, Charles, 2013. "Faulty devices and reluctant institutions: a French pragmatist approach to Down Beat's critics' poll," Insper Working Papers wpe_307, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
  16. Lutter, Mark, 2012. "Soziale Strukturen des Erfolgs: Winner-take-all-Prozesse in der Kreativwirtschaft," MPIfG Discussion Paper 12/7, Max Planck Institute for the Study of Societies.
  17. Williams, James W., 2013. "Regulatory technologies, risky subjects, and financial boundaries: Governing ‘fraud’ in the financial markets," Accounting, Organizations and Society, Elsevier, vol. 38(6), pages 544-558.
  18. Garud, Raghu & Gehman, Joel, 2012. "Metatheoretical perspectives on sustainability journeys: Evolutionary, relational and durational," Research Policy, Elsevier, vol. 41(6), pages 980-995.
  19. Olivier Godechot, 2010. "Getting a Job in Finance-The Strength of Collaboration Ties," Working Papers 2010-42, Centre de Recherche en Economie et Statistique.

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