The dark side of liquidity: shedding light on dark pools’ marketing and market-making

Lagna, Andrea; Lenglet, Marc

doi:10.1080/10253866.2019.1582415

Cited by 9 publications

(5 citation statements)

References 46 publications

(29 reference statements)

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“…HFT strips out social relations and brings additional complexities of black boxing, organizational ignorance and epistemic difference into play (see Coombs, 2016;Lange, 2016;Lenglet & Mol, 2016;Seyfert, 2016, and other contributions to issue 45 of this journal). Centralized exchange systems can be circumvented by anonymous 'dark pools' (Lagna & Lenglet, 2019).…”

Section: Discussion: Fama and White Marketsmentioning

confidence: 99%

“…Someone can come on and buy £10,000 worth and it will put it up, or if they buy or sell, it could put it up or down by five to ten per cent. (Norcross) This mechanism of direct transfer closely resembles an increasingly common form of transaction that seeks to circumvent the price formation mechanisms of main board markets, the deals between investment banks carried out in 'dark pools' or over electronic networks: large transactions made at the midprice so as not to disrupt the market (Lagna & Lenglet, 2019;MacKenzie, 2019). It also resembles the organization of markets in art or collectibles, where high profile auctions serve to set and maintain the valuation of artworks in the public sphere, while much trade is done between brokers in private (Coslor, 2016).…”

Section: Investor-based Regulationmentioning

confidence: 99%

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Flaunt the imperfections: Information, entanglements and the regulation of London’s Alternative Investment Market

Roscoe

Willman

2021

Economy and Society

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The literature on financial market design is predicated on the efficient market hypothesis (EMH), advocating transparency, liquidity and universal information with a view to capturing efficient prices. We provide a counterfactual: the 1995 formation of AIM, the London Stock Exchange's junior market. AIM employs an alternative mode of market organization based on market imperfections. Our empirical study shows how AIM draws on reputation, social relationships and practitioner knowledge to organize market governance. We argue that the market's design should be understood as capable of producing informationally efficient prices. We characterize AIM as having a 'Whitean' structure, compared

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Section: Discussion: Fama and White Marketsmentioning

confidence: 99%

Section: Investor-based Regulationmentioning

confidence: 99%

Flaunt the imperfections: Information, entanglements and the regulation of London’s Alternative Investment Market

Roscoe

Willman

2021

Economy and Society

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“…Or noise traders might be fed pseudo-signals from technical analysts and economic consultants (MacKenzie, 2019: 51). The importance of seeing correctly is why there are concerns about ‘dark pools’ (Lagna and Lenglet, 2019). It might be fairer, it is thought, if everything were ‘lit’.…”

Section: Finance As a Distinct Form Of Observationmentioning

confidence: 99%

Noise as Information: Finance Economics as Second-Order Observation

Cunningham

Curtis

2020

Theory, Culture & Society

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In noise we hear the possibility of a signal, indeed different signals, and in the multiplicity of signals we hear noise. With variation and selection comes dynamic evolution, a contingent state, one that could be otherwise. The term ‘polemogenous’ (from the French, polémogène) means that which generates polemics. And polemics are creative. If everyone, every system, were to reason in the same way, there would be silence. Every remark would be redundant, having no informational value. Thus noise is not bad. The essence of finance economics, like all that is social in nature, is a forming of meaning. Whatever cannot be formed meaningfully is not available to the system. This unavailability, as ‘noise’, is the dynamic difference (noise/information) that scintillates the system. Information, like morality, is polemogenous – it stirs contention. Without noise and the possibility of its conversion to information there would be no opportunities to exploit. This paper applies a systems theoretical understanding of observation to conceive of finance economics as the economy’s means of observing its noise and capitalizing on that polemic. Niklas Luhmann’s method is utilized to explicate some ideas on noise by financial economist Fischer Black, who suggests the incomprehensible is computable. This is finance. The fact that logical grounds, absolute deductions, and clear calculations are claimed to be rare in finance is no barrier to understanding it. Rather, this polyphonic and polemogenous information-selection is the ‘ground’ of finance, not as totalizing logic, but as different difference-production for the sake of deriving economic opportunity.

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“…By 2009/2010, US and European exchanges had lost 47.31% and 28.85% of stock market trading volume, respectively (Lannoo and Valiante 2010, p. 2f). This fragmentation of markets was since been analysed by several scholars (Mattli 2019a, b), especially the emergence of dark pools as non-exchange trading venues (Lagna andLenglet 2019, MacKenzie 2019).…”

Section: Marketisation Internationalisation and Digitisation Of Exchmentioning

confidence: 99%

“…Only few scholars have analysed the agency of exchanges, describing how they facilitated capital market development in other countries (Botzem and Dahl 2014), their role in the geographical constitution of stock markets (Engelen andGrote 2009, Wójcik 2012), or their instrumental power as policy actors in regulatory processes (Mügge 2006, Pagliari 2018. Others, especially scholars from the Social Studies of Finance (SSF), have researched changes in equity market trading like the advent of algorithmic/highfrequency trading (HFT) (Coombs 2016, Lange et al 2016, Thompson 2017, the creation of non-exchange venues such as dark pools (Patterson 2012, Lagna and Lenglet 2019, MacKenzie 2019, Mattli 2019b) and the resulting fragmentation of equity markets (MacKenzie et al 2012, Castelle et al 2016, MacKenzie 2019, Mattli 2019a.…”

Section: Introductionmentioning

confidence: 99%

From national marketplaces to global providers of financial infrastructures: Exchanges, infrastructure & power in global finance

Petry¹

2020

Preprint

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This paper analyses the role of (stock and derivative) exchanges as powerful actors in global finance. While most IPE accounts of exchanges analyse ‘exchanges as marketplaces’ and focus on equity market trading, they miss how exchanges have fundamentally transformed in the last 25 years. Through marketisation, internationalisation and digitisation, the business model of exchanges has fundamentally changed and led to the emergence of global exchange groups that dominate the exchange industry. Thereby, exchanges transformed from national marketplaces to global providers of financial infrastructures. They control the infrastructures that enable the functioning of capital markets: from market data, indices, financial products, trading platforms to post-trading activities such as clearing, exchanges create the rules according to which market transactions take place. This provision of financial infrastructures enables them to shape capital markets and represents a source of structural power, as exchanges potentially influence the actions of companies, investors and states entangled with these infrastructures. By shedding light on exchanges and their changed role and activities within capital markets, this paper makes a case for including exchanges as powerful actors into IPE analyses of global finance and for more closely analysing the structural power of (financial) infrastructure providers in the global economy.

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The dark side of liquidity: shedding light on dark pools’ marketing and market-making

Cited by 9 publications

References 46 publications

Flaunt the imperfections: Information, entanglements and the regulation of London’s Alternative Investment Market

Flaunt the imperfections: Information, entanglements and the regulation of London’s Alternative Investment Market

Noise as Information: Finance Economics as Second-Order Observation

From national marketplaces to global providers of financial infrastructures: Exchanges, infrastructure & power in global finance

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The dark side of liquidity: shedding light on dark pools’ marketing and market-making

Cited by 9 publications

References 46 publications

Flaunt the imperfections: Information, entanglements and the regulation of London’s Alternative Investment Market

Flaunt the imperfections: Information, entanglements and the regulation of London’s Alternative Investment Market

Noise as Information: Finance Economics as Second-Order Observation

From national marketplaces to global providers of financial infrastructures: Exchanges, infrastructure &amp; power in global finance

Contact Info

Product

Resources

About

From national marketplaces to global providers of financial infrastructures: Exchanges, infrastructure & power in global finance