The material production of virtuality: innovation, cultural geography and facticity in derivatives markets

Abstract

Abstract:In the existing literature, the 'virtual' nature of financial derivatives is often commented upon, but how these products are brought into being has seldom been examined in any depth. This article analyzes the development since 1970 of organized financial-derivatives trading in the U.S. and U.K. (in particular, of derivatives exchanges and of the British financial spread-betting industry), with the goal of examining the 'material production of virtuality'. The article explores the similarities and differences between technological innovation and innovation in derivatives; discusses the role of the 'internal' cultures of financial markets and of the wider culture (in particular, the legal traces of hostility to gambling); and analyzes the requirement of 'facticity' for the measure underlying a cash-settled derivative, focusing in particular on the most important such measure, British Bankers' Association LIBOR (London interbank offered rate).

Comparative and International Corporate Governance

“…The emergence of new actors and changes in investors' strategies and the use of new financial instruments raises fundamental questions regarding the potential non-unanimity of shareholders interests, the related notion of "shareholder value," and the agency relationships (Bradley, Schipani, Sundaram, & Walsh, 1999). Many of these phenomena are most actively being discussed within the literature on new "social studies in finance" (Beunza, Hardie, & MacKenzie, 2006;MacKenzie, 2007) and the economic sociology of markets (Beckert, 2003;Fligstein & Dauter, 2007), but remain sadly divorced from debates over corporate governance. Here, we note that firms are increasingly being populated by two new types of owners: foreign institutional investors and SWFs, each with their particular sets of interests on the firm, as well as strategic modes for participating in the firm.…”

Malaysian Airlines, Neoliberalism and Business as Usual in Malaysia

“…But at the global level, institutional investors enjoy a competitive advantage in accumulating infor mation about market movements because the size and scope of their positions gives them this edge. As well, coordination and networking between specific sectors of instituional investors remains common (Abolafia, 1996;MacKenzie, 2007MacKenzie, , 2008. New innovations by fund managers, such as leveraged buyouts, are quickly copied and cycles of opportunism are created that consolidate and reproduce the overall stratification of investors-as, for example, Malaysia's nationalisation, privatisation, re-nationalisation cycle in the case of Malaysian Airlines.…”

The Rise and Fall of Carbon Emissions Trading

“…For a firm to measure and report its profits, for example, each transaction or economic item must be classified according to local and global rules and conventions (MacKenzie, 2007;Hatherly et al, 2008). Carbon accounting also requires work to classify what counts as a 'human activity' and, hence, what economic policies will be necessary for a party to meet its target.…”