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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. Poon, Martha, 2009. "From new deal institutions to capital markets: Commercial consumer risk scores and the making of subprime mortgage finance," Accounting, Organizations and Society, Elsevier, vol. 34(5), pages 654-674, July.
  2. Lepratte, Leandro, 2011. "Sistemas sociotécnicos, innovación y desarrollo
    [Sociotechnical systems, innovation and development]    ," MPRA Paper 33559, University Library of Munich, Germany.
  3. Troy, Irene & Werle, Raymund, 2008. "Uncertainty and the market for patents," MPIfG Working Paper 08/2, Max Planck Institute for the Study of Societies.
  4. 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.
  5. 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.
  6. Liliana Doganova & Marie Renault, 2008. "What do business models do? Narratives, calculation and market exploration," Post-Print halshs-00347615, HAL.
  7. Anne Pezet & Jérémy Morales, 2010. "Les contrôleurs de gestion, « médiateurs » de la financiarisation," Post-Print halshs-00498673, HAL.
  8. Matthias Klaes & Geoff Lightfoot & Simon Lilley, 2007. "Market masculinities and electronic trading," SCEME Working Papers: Advances in Economic Methodology 014/2007, SCEME.
  9. 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.
  10. Millo, Yuval & MacKenzie, Donald, 2009. "The usefulness of inaccurate models: Towards an understanding of the emergence of financial risk management," Accounting, Organizations and Society, Elsevier, vol. 34(5), pages 638-653, July.
  11. Olivier Godechot, 2010. "Getting a Job in Finance-The Strength of Collaboration Ties," Working Papers 2010-42, Centre de Recherche en Economie et Statistique.
  12. 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.
  13. Miller, Peter & O'Leary, Ted, 2007. "Mediating instruments and making markets: Capital budgeting, science and the economy," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 701-734.
  14. Timothy C. Johnson, 2012. "Ethics and Finance: the role of mathematics," Papers 1210.5390, arXiv.org.
  15. 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.
  16. 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.

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