Here comes my favourite part of the year. It’s sunny again in London, Wimbledon is in full swing, and the second edition of the LSE Summer School in sociology of finance is about to start.

This three-week course for advanced undergraduates came into existence last year at LSE. It offers a new way of thinking about the capital markets, one that is different from neoclassic finance, and from behavioural economics. And the response from the students surprised even its perennially optimistic organizer, that is, myself.

So as I had sat with a coffee at Fields the other day, I asked myself: what to do to live up to the expectations? There’s even more students this year. The admissions office tells me they’re very well prepared. And with the latest round of bank scandals this year, be it Barclay’s dark pool, or BNP Paribas’ sentence, there seems to be greater than ever need for fresh thinking about finance.

So for starters, I decided to keep the good stuff. We’re staying in 32 London Fields, the coolest (and most convoluted) Victorian building ever built. We’ve kept the lectures by Yuval Millo, and by Juan Pablo Pardo-Guerra. Our volunteer TA from last year, Nina Andreeva, has now been promoted to lecturer for one session. Most importantly, we’ve kept the speakers. One per day, hectic as it sounds. So we have a managing director from a large bank in the City, a consultant on bank culture, two managers from a ratings agency, a hedge fund portfolio manager, an official from the Bank of England. And more.

There are also improvements. We have a one-day lecturer in financial communication, Franscisco Blanco, who ran the investor relations of Telefonica for a decade. I have reduced the amount of homework (I knew you’d like that). And most importantly, we have a new and energetic TA, Megan Peppel, who is taking one month off from her busy doctorate in UC Berkeley (California) to be with us this July.

For those of you who are interested, here’s the syllabus: MG301 Firms Markets Crisis Summer School reading list

So this is it. Class starts on Monday. Looking forward to it!

The Supreme Court in the US has just made a ruling that corporate misstatements is perhaps not so important if market prices are already imperfect. According to the NYTimes,

The court used that distinction to make an important change in the class-action arena. From now on, companies facing class actions can try to show at an early stage that even if they’ve made misstatements, market prices were not affected.

In other words, the ruling allows “companies to raise the issue that a stock wasn’t impacted by the fraudulent statements at the class certification stage.

The argument, which appeals to the fallibility of the the efficient market hypothesis, was introduced by Halliberton  in a case involving its asbestos liabilities.

The idea that changes in economic theory can impact on class action law is super interesting, but from a legal perspective the ruling is just tinkering (see here).


The Bank of England’s currency is no good on London buses.

As of July 6, if you want a ride on an iconic red double-decker, you’ll have to load value into a privately managed digital system and swipe it out using your Oyester card.

Cashlessness will push the privatization of public transport to a whole new level. And this time, Margaret Thatcher has nothing to do with it.

In fact, I’ll bet it never occurred to Mrs. Thatcher that privitization could lead to financialization. And private payment infrastructure is nothing if not a tool for financializing operations.

When the consumer is forced to pay for more than just the ride that they need, getting from A to B becomes a relationship that looks a lot more like credit and less like exchange.

The terms of this relationship are pretty good if you’re a business entity like Transport for London. By separating the moment of payment from the moment of service, digital infrastructure makes sure we’re always paying TFL for more than we’re taking. For the TFL, this transforms ticket sales into a manageable stream of revenue, while for the consumer it turns fares into a forced transfer of savings.

The Evening Standard reports that £100m is stuck on unused Oyester cards, which shows just how effectively the system transfers risk onto users.

Users that cannot afford to take on the burden of advanced payment can grab their brolly and walk. The £5 deposit on the plastic chip card acts as a baseline barrier to entry, and you can only become a passenger if you can afford to keep a store of value lock into the card.

Logistical considerations add further to the cost that falls on the consumer. Before traveling on the bus, people who can’t do online banking must take the time and effort to convert cash into digital credit at a corner-store or tube station.

Without cash, inclusion and exclusion from transportation is not just a socio-economic condition. The technical system of payment creates an additional qualification over and above money that determines who can and cannot travel. Let’s call this quality ‘rideworthiness’ – a person’s ability to maintain constant contact within a specific technical system. The Evening Standard projects that as many as 2,000 people could end up stranded every day because that’s how many cards get lost or stolen.

Yup, that’s me out there, standing out in a cold rain, rummaging through my purse. My Oyester card is in the back pocket of the jeans I threw in the laundry this morning before I decided to walk to work.

But maybe I should feel good as I tromp over to Holborn station to put my downpayment on a new Oyester. After all, I’m helping the TFL save an additional £24m each year because they no longer have to count my heavy pound coins. Their gain is my miserable wet walk. This is my share of the public’s burden of reducing TFL’s operating cost.

It’s hard to understand the technical details of finance.

It’s even harder to write them down.

Over the last couple of years, I’ve been trying to figure out how we can make research about technical things more accessible to each other. As editor of LSE’s Risk & Regulation Magazine I’ve had a chance to put myself in the shoes of the reader.

When I’m looking at drafts for R&R I think of each two-page feature as a single-serving portion. Which parts are most delicious and crunchy?  Which parts are too sticky, crumbly, runny…? I dream of research summaries that leave people with that special feeling you get when you walk away from a great new snack – your curiosity’s satisfied, but you wish there was just a little more at the bottom of the bag.

One unusual feature of R&R is that it’s produced by LSE’s talented team of in-house graphic designers. Once the text is nailed down, we pull together an original layout that amplifies the author’s argument or the emotional tone of the research. I hope others will agree that visual images can help people engage with topics that might not otherwise catch their attention. At least two of our author have found their R&R piece useful for public engagement. Jonathan Metzel had his piece linked to on the msNBC website, and the FT linked to a contribution by Annelise Riles.

My favorite part of the design process is creating the print edition’s cover. Upon request, our lead designer Liz Mosley has made a chess piece out of a horse and grinder and put a Victorian teacup inside a firebox…! I can’t help but laugh whenever I see our conversations materialized in her images. Designers like Liz have a tremendous skill for translating words into pictures.

Our latest issue of R&R is dedicated the thorny issue of financial innovation. It was released online earlier today, so please have a look when you get a chance! And for the special community of this blog, you’ll find all the articles I’ve produced for R&R that relate directly to social studies of finance, with links, after the jump. A special thanks is due to the friends who are such good sports for letting me miniaturize their work. I’m truly delighted by this little collection of experimental ‘ssf’ snacks.

Issue 27, Risk & Regulation Magazine, Full Issue.

Read the rest of this entry »

The Institute for Money, Technology and Financial Inclusion at University of California, Irvine, has two post doctoral positions on offer.

That’s right, sun-seekers. This is your big chance to work with the fabulous Bill Maurer!

Deadline for applications is June 23, 2014. See here for details

The Provoked Economy

June 6, 2014

Plug: some blog readers may be interested in The Provoked Economy: Economic Reality and the Performative Turn (Routledge, 2014), which contains some bits on finance. See more details (including some forthcoming chapter-by-chapter snippets) in the companion blog From the book description:

Do things such as performance indicators, valuation formulas, consumer tests, stock prices or financial contracts represent an external reality? Or do they rather constitute, in a performative fashion, what they refer to?

The Provoked Economy tackles this question from a pragmatist angle, considering economic reality as a ceaselessly provoked reality. It takes the reader through a series of diverse empirical sites – from public administrations to stock exchanges, from investment banks to marketing facilities and business schools – in order to explore what can be seen from such a demanding standpoint. It demonstrates that descriptions of economic objects do actually produce economic objects and that the simulacrum of an economic act is indeed a form of realization. It also shows that provoking economic reality means facing practical tests in which what ought to be economic or not is subject to elaboration and controversy.

This book opens paths for empirical investigation in the social sciences, but also for the philosophical renewal of the critique of economic reality. It will be useful for students and scholars in social theory, sociology, anthropology, philosophy and economics.

Fabian Muniesa is a researcher at the Centre de Sociologie de l’Innovation, École des Mines de Paris. He looks at calculation, valuation and organization from a pragmatist standpoint, with a focus on the problems of business pedagogy, managerial performance, financial innovation and economic reasoning.

If you’re into SSF and happen to be in Warwick University next Tuesday…

Seminar at the Information Systems Management group

Speaker: Professor Yuval Millo, University of Leicester

Where do Electronic Markets Come From? Regulation and The Transformation of Financial Exchanges

Date: Tuesday 20 May 2014
Venue: M2, MBA Teaching Centre
Time: 14.00

 Michael Castelle1, Yuval Millo2, Daniel Beunza3

1. University of Chicago

2. University of Leicester School of Management (Corresponding author)

3. London School of Economics


The recent history of the stock exchange as an institution is portrayed frequently as that of precipitous decline and destabilization. The widely accepted reason for this decline is the automation of trading of financial assets and contracts. In this paper we aim to add a theoretical and empirical basis to this broad explanatory narrative, and suggest that traditional exchanges were not simply marginalized by competition from electronic trading platforms, but that a more sophisticated historical and sociotechnical process was at play. Our research indicates that interactions between the regulatory discourses and technological materialities led to a reconfiguration of the nature of competition among U.S. exchanges; to an increased fragmentation of market share; and, ultimately, to a dramatic change in the nature of financial exchanges. This paper focuses its analysis on the Securities and Exchange Commission’s Regulation of Exchanges and Alternative Trading Systems (Regulation ATS) —which threatened, disrupted, and formally redefined the ontology of the exchange.

Exchanges compete across various dimensions: most importantly, trading facilities and new listings. However, our findings show that Reg ATS contributed to a dissolution of the distinction between exchanges and broker-dealers, which used to be the customers of exchanges. The latter—via the technological affordances of electronic communication and transaction-processing database systems but also through the increased (and SEC-mandated) standardization of trade reporting, quotes, and orders—began to pragmatically provide functionality previously unique to exchange trading floors.

This radical equivalence between “broker” and “exchange” cannot be attributed only to technological progress or the intentional outcome of regulatory action, but its history is the fulcrum of the transformation in the nature of financial exchange.




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