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Where are the market devices? Exploring the links among regulation, markets, and technology at the securities and exchange commission, 1935–2010

Abstract

This article examines regulation’s understanding of technology in American financial markets as means for rethinking the contours and institutional limits of governance in the age of financialization. The article identifies how the Securities and Exchange Commission perceived markets and their conceptual relation to technology throughout much of the long twentieth century by distilling the “ontologies” expressed by the agency’s leadership. Despite the fact that SEC’s commissioners recognized technologies as playing a central role in the market’s current and future operations, these were never effectively brought under regulatory scrutiny even when such action fell under the commission's jurisdictional remit. Rather than regulating technologies as constitutive of markets, the governance of the material devices of finance was discursively kept at arm's-length by presenting them as intractable objects that were external to financial innovation. Triangulating across several techniques of computational text analysis, this article shows how this interpretation of technology mirrored distinct shifts in how regulators understood markets, from being physical trading sites populated by agents that required vetting and certification to a distributed, multi-sited system surveilled through transparency and disclosure. Throughout these ontological transitions, technology’s inscrutability remained, limiting the capacity of the state and its regulatory agencies to shape the evolution of finance and its underlying infrastructures.

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Notes

  1. The 15 topic models were grouped into 5 themes through the following coding strategy. The theme of “corporations” was composed of the topics of “corporate governance,” “corporate disclosure,” “corporate finance,” and “public companies.” The theme of “intermediaries” is formed by the topics “investment intermediaries,” “investment managers,” and “public offers.” The theme of “enforcement” is formed by the topics of “enforcement,” “public mandate,” and “rulemaking.” “Market organization” included the topics “market structure,” “global markets,” and “accounting standards.” Finally, the theme of “disclosure” combined the topics of “accounting” and “investment information.”

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Acknowledgments

I thank Bruce Carruthers and Stephen Craig Nelson for their always constructive advice, as well as the generous suggestions from audiences at the London School of Economics and Political Science, the University of Leicester, the University of California at Berkeley, and the 2015 Meeting of the Society for the Advancement of Socio-Economics.

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Correspondence to Juan Pablo Pardo-Guerra.

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Pardo-Guerra, J.P. Where are the market devices? Exploring the links among regulation, markets, and technology at the securities and exchange commission, 1935–2010. Theor Soc 49, 245–276 (2020). https://doi.org/10.1007/s11186-020-09383-4

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Keywords

  • Computational triangulation
  • Finance
  • Financial regulation
  • Ontologies
  • Stock markets
  • Technology