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

Author

Listed:
  • Castelle, Michael
  • Millo, Yuval
  • Beunza, Daniel
  • Lubin, David C.

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.

Suggested Citation

  • Castelle, Michael & Millo, Yuval & Beunza, Daniel & Lubin, David C., 2016. "Where do electronic markets come from? Regulation and the transformation of financial exchanges," LSE Research Online Documents on Economics 68650, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:68650
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    File URL: http://eprints.lse.ac.uk/68650/
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    Cited by:

    1. Joanne P. Baron, 2018. "Making money in Mesoamerica: Currency production and procurement in the Classic Maya financial system," Economic Anthropology, Wiley Blackwell, vol. 5(2), pages 210-223, June.
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    3. Roscoe, Philip & Willman, Paul, 2021. "Flaunt the imperfections: information, entanglements and the regulation of London’s Alternative Investment Market," LSE Research Online Documents on Economics 114480, London School of Economics and Political Science, LSE Library.
    4. Grahame F. Thompson, 2020. "Deal or no deal? Some reflections on the ‘Baker-Thompson rule,’ ‘matching,’ and ‘market design’," Journal of Cultural Economy, Taylor & Francis Journals, vol. 13(5), pages 652-662, September.

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    More about this item

    Keywords

    financial markets; production markets; regulation; stock exchanges; technology; marketplace platforms;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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