Where are the market devices? Exploring the links between regulation, markets, and technology at the Securities and Exchange Commission, 1935-2010

Abstract

Why did financial regulators neglect oversight of rapid technological change in markets, despite the increasingly transformative power of technology? In this paper, I turn to this puzzling omission as an opportunity to consider the conjoined histories of technology, governance, and regulatory imaginaries in finance. For this, I leverage the concept of market ontologies (Lie 1997) as a way of addressing the semantic and cultural constellations that shape attitudes about, and the governance of, the economic world. To understand the relative neglect of technology as an object of regulation, I study the content, constraints, and possibilities implied by the market ontologies of American financial regulators between c. 1930 and 2012. In identifying these loose and nebulous constellations of understanding, I link my exploration of ontologies to their uses in computer science, where they are operationalized as representations of discourse within particular domains that outline meaning as formed by how concepts are classified into larger, interrelated sets (Poli et al 2010). This computational characterization inspires my methods and allows tracing the ontological evolution of the Securities and Exchange Commission’s understanding of technology in relation to markets over much of the twentieth century. To regulate markets, agents must first conceptualize these entities to render them concrete objects for governance. Studying regulators’ market ontologies is thus an opportunity to understand what type of objects they think need governing and which might be glossed over.

A comparison between qualitative and quantitative histories: the example of the efficient market hypothesis

“…Indeed, to date, the history of the EMH has been mainly studied with qualitative approaches. However, the rare quantitative analyses that have been made provided new results and perspectives on the history of this hypothesis (Daemen 2010, Fourcade and Khurana 2017, Jovanovic 2012, Pardo-Guerra 2016, Polillo 2015. For instance, and as this article will detail, since the EMH was proposed, several criticisms emerged.…”