Sucking information out of Washington, getting it to New Jersey

July 16, 2013

This 10 minute clip from CNBC which aired Friday explains how CoreSite’s colocation facility helps high frequency traders respond more quickly to government data.

Mediation, it’s the missing word in studies of finance.

We need to replace talk of ‘morality’ with an analysis of the architecture of ‘mediation’ through corporate entities.

3 Responses to “Sucking information out of Washington, getting it to New Jersey”

  1. zsuzsannavargha Says:

    Hi Martha,

    This is a really interesting piece of news. If I understand well, what is considered to be market-moving information, or rather its source, is physically approximated so that the information can be literally plugged in to the algorithms.

    I recently read about somewhat similar arrangements by Thomson Reuters to release consumer survey data to High Frequency Traders two seconds earlier than to others, for a fee.

    What is striking about this is that both the government and the consumer data are not strictly “market” information in the economists’ sense of “price”. Previously the HFT efforts seemed to center around getting price information and orders faster. Now there is all this auxiliary information that they try to channel in, so the physicality of the fast market is overflowing the price. They get the news before those are built into prices by others.

    But apparently this two-second advantage given by Thomson has now been banned by the NY Attorney General.
    http://www.npr.org/blogs/money/2013/07/08/200017770/the-end-of-a-2-second-advantage-for-high-speed-traders

    I completely agree that mediation is a crucial concept here. But I don’t see how it is at odds with studying “morality”. For example, the recent piece on High Frequency Trading by MacKenzie, Pardo-Guerra, Beunza and Millo in the Journal of Cultural Economy, shows how the two pretty much go hand in hand.

    I’m linking the papers for those who are not familiar with them
    http://www.sps.ed.ac.uk/staff/sociology/mackenzie_donald/?a=78186 (http://www.tandfonline.com/doi/abs/10.1080/17530350.2012.674963)

    Another example is Fabian Muniesa’s earlier description of the shift to a different calculation of the closing price in the Paris Bourse. (http://www.csi.ensmp.fr/Perso/Muniesa/FMPUBPRINTS/Muniesa_2007_MarketTechnologiesPragmaticsPrices.pdf)

    They seem to talk about architectures of mediation through corporate entities and morality at the same time. But maybe you mean “morality” in a specific way that is different from the way they understand.

  2. Philip Grant Says:

    I was also struck by the contrast between ‘mediation’ and ‘morality’. I took ‘morality’ here to refer to the moralising by the three guests on this programme, in which case, I wholly agree that SSF is not about morality in the sense of condemning this kind of innovation as unfair. On the other hand, it seems to me that absolutely one of the central foci of our inquiries should be the question of morality, and of its cousin, ethics. Watching this clip is yet another reminder of how arguments about finance by financial practitioners, economists, and journalists (and no doubt others too) are always arguments about how to live well, themselves framed by often unspoken assumptions about the possible forms of life that might be desirable.
    Here the assumption is that markets going up means everyone is happy (the presenter seems to think this claim reiterated negates all further discussion of the merits of HFT). The arguments about how to live well within a (best of all possible?) world where rising markets are an index of (the very substance of?) wellbeing invoke a key value, ‘fairness’, explicitly mentioned at the beginning of the economics professor’s intervention, and implicit as a moral claim in economics’ study and advocacy of ‘markets’ as the best means of the organisation and distribution of production and consumption. It is also implicit in the ethical figures invoked by the two guests (I was unsure who they were – day traders? Representative ‘ordinary people’?): the ‘regular guy’ (but not the regular woman?), the ‘ordinary person’, or ‘the ordinary girl from Ohio’ whose financial market activities are curtailed by the advent of HFT and algos.
    Our contribution in SSF ought very much to be to tease out these moral claims, these ethical frameworks, and ask how they come to make sense or otherwise to those who make them and live by them, and, in cases where they seem so inadequate to the complex reality (technological, social, etc.) we aim to give an account of, to ask what enables them to persist despite this inadequation – all the while taking them very seriously even if our own work does not result in a similar moral condemnation. – Which is not to say, of course, that we can or ought to be ethico-politically neutral in our work.

  3. marthapoon Says:

    Sociologically based analyses are already very attentive to moral discourse. I guess my point was that an empirically informed understanding CoreSite and the services it provides as a specific private company with a particular position in the markets could contribute far more to a politically engaged discussion about how markets are changing than the kind of morally charged reasoning given by the guests on this clip.

    I was invoking mediation as an architecture of action (not a concept). Is morality a concept and/or a set of conflicting claims? All the better for drawing the contrast I’m invoking here…!


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