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

Michael Castelle, Yuval Millo, Daniel Beunza and David C. Lubin

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: 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.

Keywords: financial markets; production markets; regulation; stock exchanges; technology; marketplace platforms (search for similar items in EconPapers)
JEL-codes: F3 G3 (search for similar items in EconPapers)
Date: 2016-09-26
New Economics Papers: this item is included in nep-mst and nep-pay
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Citations: View citations in EconPapers (4)

Published in Economy and Society, 26, September, 2016, 45(2), pp. 166-200. ISSN: 0308-5147

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