Transaction Machines The

Total Page:16

File Type:pdf, Size:1020Kb

Transaction Machines The TRANSACTION MACHINES THE INFRASTRUCTURE OF FINANCIAL MARKETS Bogdan Dragos PhD Thesis Centre for Cultural Studies Goldsmiths, University of London May 2016 Declaration The work presented in this thesis is the candidate’s own. Bogdan DraGos London, October 2015 2 Abstract This thesis describes financial markets as complex machines in the broader sense, as systems for organizing informational flows and performing certain functions in regards to the processing of transactions. We focus on the transaction infrastructure of financial markets, on the flow architecture that allows transactions to happen in the first place. First, in order for a financial market to function there needs to be some mechanism for aggregating and matching disparate transactional requests. Another mechanism is then needed in order to untangle and reduce the complexity of overlapping exposures between participants. The history of finance shows us that there are indeed certain patterns and regularities, procedures and mechanisms present in any system that processes financial transactions. The thesis describes this sequence of functions as transaction machines, understood as complex socio- technical systems for the execution of financial transactions. This is achieved by leveraging a specific philosophical account of technology coupled with a computational and evolutionary account of financial markets. We ultimately focus two types of transaction machines, performing the matching and clearing of financial flows, acting as the infrastructure of financial markets. We also provide a sketch for an evolutionary trajectory of these machines, evolving under the demands and needs of marker participants. From medieval fairs to the millisecond electronic platforms of today, transaction machines have gradually transitioned from human- based ‘hardware’ to electronic automated platforms. Moreover, we also describe the complex power dynamics of contemporary transaction machines. In as much as they are the dominant hubs of global financial markets, the thesis argues for the necessity of a more granular account of the functioning and evolution of transaction machines. 3 Acknowledgements This is dedicated to Ana, whose patience and support made the whole endeavour possible. This thesis would not have been possible without my colleagues from the Centre for Cultural Studies who provided an intellectually stimulating environment for the development of this thesis. In particular, I would like to thank Inigo, Sebastian, Carina and Matt. I would also like to thank my supervisor Scott Lash for his guidance and enthusiasm throughout this process. This thesis would not have been possible without a series of fortunate encounters with Bernard Stiegler and Philip Mirowski. Parts of Chapter 6 and 8 have been previously published1. 1 DraGos, B. and Wilkins, I. (2014) ‘An eColoGiCal/evolutionary perspeCtive on high-frequency trading’, Journal of Sustainable Finance & Investment, 4(2), 161- 175. 4 Table of Contents Declaration ................................................................................................................................... 2 Abstract .......................................................................................................................................... 3 Acknowledgements .................................................................................................................... 4 Table of Contents ........................................................................................................................ 5 List of Figures ............................................................................................................................... 7 Introduction ........................................................................................................................ 8 What is a TransaCtion MaChine? ..................................................................................................... 14 Theory, History and EmpiriCal ........................................................................................................ 19 Chapters .................................................................................................................................................... 26 PART I: THEORY .............................................................................................................. 29 Chapter 1. Markets and Assemblages ............................................................................... 29 1.1 New Sociology of Finance ........................................................................................................... 30 1.2 AssemblaGe Theory and Markets ............................................................................................ 38 ConClusion ................................................................................................................................................ 45 Chapter 2. Technology and Individuation ....................................................................... 47 2.1 Philosophy of Individuation ...................................................................................................... 48 2.2 The Amplifying Relay and the Tendency of Concretization ........................................ 56 2.3 The Modes of Existence of TeChniCal ObjeCts .................................................................... 62 ConClusions .............................................................................................................................................. 69 Chapter 3. Markomata: Markets as Algorithms ............................................................. 72 3.1 Mirowski and Unorthodox EConomiCs ................................................................................. 73 3.2 John von Neumann’s Theory of Automata .......................................................................... 79 3.3 Market ECology ............................................................................................................................... 83 3.4 Experiments, Market MiCrostruCture and Zero IntelliGenCe ...................................... 86 3.5 Mirowski’s Markomata ................................................................................................................ 90 3.6 Markets as Evolving Computations ....................................................................................... 95 ConClusions .............................................................................................................................................. 99 PART II: HISTORY ......................................................................................................... 102 Chapter 4. Medieval Transaction Machines .................................................................. 102 4.1 Towns and Markets ................................................................................................................... 103 4.2 MerChants and Double-Entry Bookkeeping .................................................................... 106 4.3 MatChing: Brokers and Bourses ........................................................................................... 112 4.4 Clearing Fairs and Bills of ExChange .................................................................................. 119 ConClusions ........................................................................................................................................... 126 Chapter 5. Modern Exchanges ........................................................................................... 128 5.1 The London Stock ExChange .................................................................................................. 129 5.2 The New York Stock ExChange .............................................................................................. 133 5.3 Development of ECNs ............................................................................................................... 139 5.5 London, Paris and ChiCaGo ...................................................................................................... 145 5.4 NYSE and the Hybrid Market ................................................................................................. 151 ConClusions ........................................................................................................................................... 156 Chapter 6. Clearinghouses & CCPs ................................................................................... 158 6.1 Bank Clearing in London and New York ........................................................................... 159 5 6.2 Clearing the Stock Market ....................................................................................................... 165 6.3 Clearing Derivatives .................................................................................................................. 170 6.4 The Evolution of Clearing MaChines ................................................................................... 178 6.5 Clearing with Computers ......................................................................................................... 186 ConClusions ........................................................................................................................................... 191 PART III: CONTEMPORARY TRANSACTION MACHINES .................................... 193 Chapter 7. Matching in the Age of High Frequency Trading ...................................
Recommended publications
  • Dynamic Spectrum Auction in Wireless Communication
    SpringerBriefs in Electrical and Computer Engineering [email protected] More information about this series at http://www.springer.com/series/10059 [email protected] Yanjiao Chen • Qian Zhang Dynamic Spectrum Auction in Wireless Communication 2123 [email protected] Yanjiao Chen Qian Zhang Department of Computer Science Department of Computer Science and Engineering and Engineering Hong Kong University of Science Hong Kong University of Science and Technology and Technology Kowloon Kowloon Hong Kong SAR Hong Kong SAR ISSN 2191-8112 ISSN 2191-8120 (electronic) SpringerBriefs in Electrical and Computer Engineering ISBN 978-3-319-14029-2 ISBN 978-3-319-14030-8 (eBook) DOI 10.1007/978-3-319-14030-8 Library of Congress Control Number: 2015930014 Springer Cham Heidelberg New York Dordrecht London © The Author(s) 2015 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication.
    [Show full text]
  • Thinking the Ecological Present
    THINKING THE ECOLOGICAL PRESENT by Eva Perez de Vega THINKING THE ECOLOGICAL PRESENT ABSTRACT p.1 ECOLOGICAL THINKING p.2 1.1 The nature‐culture dialectic 1.2 Deep and dark ecology 1.3 Flat ecology EXPRESSIVE ECOLOGY p.8 2.1 Ecology beyond essences 2.2 Non‐human expressivity 2.3 Ecology as abstract machine ACTING ECOLOGICALLY p.15 3.1 Practicing and acting 3.1 Matter and transformation 3.2 Intentional omissions NOTES p.19 BIBLIOGRAPHY p.21 ABSTRACT Thinking about the present ecological situation necessarily implies a re‐thinking of the thinking about nature. This paper will look at some of the recent critiques to this thinking (deep, dark and flat ecology) in an attempt to extract and formulate possibilities for action. As will be developed, deep ecology subjectifies nature; shallow ecology objectifies nature; dark ecology rejects nature; while flat ecology intensifies it, treating it as a comprehensive ontology of nonhierarchical complex material systems, both human and non‐human, defined by their process of production within an energetic environment.1 This generalized ecology turns ecology into a complex transdisciplinary project linking philosophy, sociology, anthropology, art, literature, politics, music, history, and the sciences. With disciplinary promiscuity2 we introduce more questions and unknowns that could possibly be answered. Yet with all its problems, it is this promiscuity that gives rise to potentiality; to the emergence of the possible and the possible emergence of a new way of operating on the environment. Eva Perez de Vega 1 ECOLOGICAL THINKING 1.1 The nature‐culture dialectic Vase made by bees Thinking about the present ecological situation necessarily implies a re‐thinking of the thinking about nature.
    [Show full text]
  • Deterritorializing the Canadian Museum for Human Rights Adam Muller
    82 Deterritorializing the Canadian Museum for Human Rights Adam Muller Abstract: This article asserts the value of assemblage theory to making sense of a museum like the Canadian Museum for Human Rights (CMHR), which has struggled with the formidable challenge of comparatively representing human rights in ‘difficult’ cultural and historical contexts. While acknowledging the many merits and productive outcomes of the relatively recent intersectional and interdisciplinary turn in ‘new’ museology, I argue that a fully realized assemblage theory such as that developed by the Mexican-American filmmaker and philosopher Manuel DeLanda holds the potential to substantially refine and extend the explanatory power of this kind of approach. With particular reference to the CMHR’s interactions/ intersections (and so positionality) with the various legacies of Canadian settler colonialism, and more specifically debates over the question of genocide and the nation’s commitment to upholding the right to water, I argue that ‘assemblage thinking’ permits us to appreciate more richly, and in a more nuanced way, the museum’s evolving identity, representational strategies, and growing accumulation of expressive power. More broadly, I contend that assemblage theory is ideally configured to map the dynamic interaction/intersection of overlapping clusters of large- and small-scale objects, spaces, ideologies, memories, feelings, structures, histories, and experiences constitutive of institutions and sites of conscience such as the CMHR. Key words: Assemblage;
    [Show full text]
  • Ascending Auctions with Package Bidding
    Frontiers of Theoretical Economics Volume 1, Issue 1 2002 Article 1 Ascending Auctions with Package Bidding Lawrence M. Ausubel∗ Paul R. Milgrom† ∗University of Maryland, [email protected] †Stanford University, [email protected] Copyright c 2002 by the authors. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, elec- tronic, mechanical, photocopying, recording, or otherwise, without the prior written permis- sion of the publisher, bepress, which has been given certain exclusive rights by the author. Frontiers of Theoretical Economics is produced by The Berkeley Electronic Press (bepress). http://www.bepress.com/bejte Ascending Auctions with Package Bidding Lawrence M. Ausubel and Paul R. Milgrom Abstract A family of ascending package auction models is introduced in which bidders may determine their own packages on which to bid. In the proxy auction (revelation game) versions, the outcome is a point in the core of the exchange economy for the reported preferences. When payoffs are linear in money and goods are substitutes, sincere reporting constitutes a Nash equilibrium and the outcome coincides with the Vickrey auction outcome. Even when goods are not substitutes, ascending proxy auction equilibria lie in the core with respect to the true preferences. Compared to the Vickrey auction, the proxy auctions generate higher equilibrium revenues, are less vulnerable to shill bidding and collusion, can handle budget constraints much more robustly, and may provide better ex ante investment incentives. KEYWORDS: auction theory, FCC auctions, package bidding, combinatorial bidding, activity rule, bid Improvement rule, e-commerce, electronic commerce Ausubel and Milgrom: Ascending Package Auctions 1.
    [Show full text]
  • Peer-To-Peer Energy Trading in Virtual Power Plant Based on Blockchain Smart Contracts
    Received August 5, 2020, accepted September 18, 2020, date of publication September 23, 2020, date of current version October 6, 2020. Digital Object Identifier 10.1109/ACCESS.2020.3026180 Peer-to-Peer Energy Trading in Virtual Power Plant Based on Blockchain Smart Contracts SERKAN SEVEN1, GANG YAO 2, (Member, IEEE), AHMET SORAN3, (Member, IEEE), AHMET ONEN 4, (Member, IEEE), AND S. M. MUYEEN 5, (Senior Member, IEEE) 1Software Engineering Department, Abdullah Gül University, 38080 Kayseri, Turkey 2Sino-Dutch Mechatronics Engineering Department, Shanghai Maritime University, Shanghai 201306, China 3Computer Engineering Department, Abdullah Gül University, 38080 Kayseri, Turkey 4Electrical-Electronics Engineering Department, Abdullah Gül University, 38080 Kayseri, Turkey 5School of Electrical Engineering Computing and Mathematical Sciences, Curtin University, Perth, WA 6102, Australia Corresponding author: Ahmet Onen ([email protected]) This work was supported by the Shanghai Science and Technology Committee Foundation under Grant 19040501700. ABSTRACT A novel Peer-to-peer (P2P) energy trading scheme for a Virtual Power Plant (VPP) is proposed by using Smart Contracts on Ethereum Blockchain Platform. The P2P energy trading is the recent trend the power society is keen to adopt carrying out several trial projects as it eases to generate and share the renewable energy sources in a distributed manner inside local community. Blockchain and smart contracts are the up-and-coming phenomena in the scene of the information technology used to be considered as the cutting-edge research topics in power systems. Earlier works on P2P energy trading including and excluding blockchain technology were focused mainly on the optimization algorithm, Information and Communication Technology, and Internet of Things.
    [Show full text]
  • A Historical Materialist Response to New Materialism Abstract
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Kingston University Research Repository Science, Agency, and Ontology: A Historical Materialist Response to New Materialism Abstract In recent years the work of a diverse range of thinkers has been grouped together under the label ‘new materialism’. This article offers a critical introduction to new materialism that challenges its understanding of historical materialism. It aims to demonstrate not that historical materialism is superior to new materialism, but rather that the latter would benefit from engaging with rather than ignoring or dismissing the former. It begins by defining new materialism in relation to its reappraisal of science, its concept of agency, and its underlying ontology. Second, it locates new materialism by demonstrating how and why many new materialists are hostile to historical materialism. Finally, it responds to new materialist criticisms of historical materialism, arguing both that there are potential areas of agreement between the two materialisms and that historical materialism offers valuable resources for analysing historically specific and asymmetric power relations. 1 Science, Agency, and Ontology: A Historical Materialist Response to New Materialism In the final two decades of the twentieth century, radical Anglophone social and political theory frequently took its cue from post-structuralism, with its emphasis on the discursive and linguistic production of subjectivity. In contrast, numerous commentators have suggested that the first few years of this century have witnessed a materialist turn within the humanities and social sciences, with a new interest in the relevance of the material world to social and political concerns (e.g.
    [Show full text]
  • MANUEL DELANDA and the NONORGANIC LIFE of AFFECT Alan Boardman
    59 CARBON MONOCHROME: MANUEL DELANDA AND THE NONORGANIC LIFE OF AFFECT Alan Boardman Abstract This paper focuses on the new-materialist philosophy of Manuel DeLanda and its application to visual-art theory through the material of contemporary monochrome painting. It asks: can the monochrome act as a ‘material of thought’ to orient DeLanda’s new materialism toward theorising the materiality of art in the context of the anthropocene? The raw- earth pigment monochromes and landscape interventions of Onya McCausland and the lab-grown nanotube pigment monochrome and sculpture works of Frederik De Wilde provide iterations of the monochrome for this analysis. An analysis of carbon through these artworks as a ‘material of thought’ facilitates access to the materiality of artworks more generally. This article proposes a new-materialist interpretative framework that goes beyond the parameters where meaning is produced through a phenomenological approach, through artistic intention or viewer interaction, and instead locates the artwork within assemblages constituted by human and non-human affects. It provides the basis for a new-materialist theory of art that is grounded in materiality, that constitutes the contemporary art object as a nonorganic life and one that opens up new territories for thinking art in the anthropocene. Keywords: new materialism, Manuel DeLanda, materiality, affect, contemporary monochrome painting, nonorganic life, anthropocene Full text: https://openartsjournal.org/issue-7/article-4 DOI: http://dx.doi.org/10.5456/issn.2050-3679/2019s04 Biographical note Alan Boardman is an artist and researcher based in Ireland. His practice is engaged with painting and the materiality of art in the context of the anthropocene.
    [Show full text]
  • Unflat Ontology: Essay on the Poverty of Democratic Materialism
    A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Kvachev, Vadim Article — Published Version Unflat Ontology: Essay on the Poverty of Democratic Materialism Stasis Provided in Cooperation with: The Bichler & Nitzan Archives Suggested Citation: Kvachev, Vadim (2020) : Unflat Ontology: Essay on the Poverty of Democratic Materialism, Stasis, ISSN 2500-0721, European University at Saint-Petersburg, Saint Petersburg, Vol. 9, Iss. 1, July, pp. 13-34, http://bnarchives.yorku.ca/652/ This Version is available at: http://hdl.handle.net/10419/223346 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative
    [Show full text]
  • The Nonhuman Lives of Videogames
    Georgia State University ScholarWorks @ Georgia State University Communication Theses Department of Communication 8-12-2014 The Nonhuman Lives of Videogames Cameron Kunzelman Follow this and additional works at: https://scholarworks.gsu.edu/communication_theses Recommended Citation Kunzelman, Cameron, "The Nonhuman Lives of Videogames." Thesis, Georgia State University, 2014. https://scholarworks.gsu.edu/communication_theses/110 This Thesis is brought to you for free and open access by the Department of Communication at ScholarWorks @ Georgia State University. It has been accepted for inclusion in Communication Theses by an authorized administrator of ScholarWorks @ Georgia State University. For more information, please contact [email protected]. THE NONHUMAN LIVES OF VIDEOGAMES by CAMERON KUNZELMAN Under the direction of Alessandra Raengo ABSTRACT Videogames are not subjects to be operated on, but rather bodies that humans live both with and inside of. In order to reconcile human existence with this nonhuman life, this thesis looks to evaluate the exact relationships developed between humans and assemblages in order to understand how humans are disciplined to return to games time and time again. The recognition of the nonhuman life of videogames necessitates a rethinking of the word “life,” as well as a reformulation of ethics around the new sets of obligations humans have toward videogames if we begin to recognize them as alive. INDEX WORDS: Nonhumans, Videogames, Game studies, Life THE NONHUMAN LIVES OF VIDEOGAMES by CAMERON KUNZELMAN
    [Show full text]
  • This Version of Delanda's Text Is Quite Different Than the One Already Posted to Nettime in the Fall
    Short Note: This version of DeLanda's text is quite different than the one already posted to nettime in the fall. Markets and Anti-Markets Manuel DeLanda Delivered at MetaForum III/UNDER CONSTRUCTION/Budapest Content Conference Oct. 1996, www.isys.hu/metaforum INTRODUCTORY REMARKS Before I begin my reading this essay, I would like to introduce some background to you so you can see where I am coming from. Though I began my career as an artist and still make my living as a computer artist, I consider myself a philosopher. I have been publishing for fifteen or sixteen years, specializing in the Philosophy of Science. This is important because what I will read is a criticism of economic ideas. Since I am not an economist, you might wonder, "How does he dare to do this criticism?" The answer is that there exists a large branch of the Philosophy of Science, called the Philosophy of Economics, concerned with issues of methodology and conceptual structure of economic theories. It is a branch that has grown in the last two or three decades. And it is from the point of view of the Philosophy of Economics that I would like to speak today. The Philosophy of Science up to the early 1960s was dominated by Positivism, beginning with the Vienna Circle which espoused a very idealistic vision of what science is. Scientists were pictured as these rational human beings who pursued truth at the expense of anything else: constantly engaging with one another in perfectly logical dialogues and basically elaborating on those theories that could be reduced to logic and logistic rationality.
    [Show full text]
  • Media Ecology Through Assemblage Theory Razón Y Palabra, Vol
    Razón y Palabra ISSN: 1605-4806 [email protected] Universidad de los Hemisferios Ecuador Ralón, Laureano Beyond the organicist metaphor: Media ecology through assemblage theory Razón y Palabra, vol. 21, núm. 96, enero-marzo, 2017, pp. 511-539 Universidad de los Hemisferios Quito, Ecuador Available in: http://www.redalyc.org/articulo.oa?id=199551160027 How to cite Complete issue Scientific Information System More information about this article Network of Scientific Journals from Latin America, the Caribbean, Spain and Portugal Journal's homepage in redalyc.org Non-profit academic project, developed under the open access initiative RAZÓN Y PALABRA Primera Revista Electrónica en Iberoamérica Especializada en Comunicación http://revistas.comunicacionudlh.edu.ec/index.php/ryp Beyond the organicist metaphor: Media ecology through assemblage theory Além da metáfora organicista: ecologia da mídia através da teoria assemblage Más allá de la metáfora organicista: Ecología de los medios a través de la teoría del ensamblaje Laureano Ralón Figure/Ground (Argentina) [email protected] Fecha de recepción: 3 de octubre de 2016 Fecha de recepción evaluador: 15 de diciembre de 2017 Fecha de recepción corrección: 1 de febrero de 2017 Abstract This article conducts a speculative analysis of the media ecology framework and, in particular, of Marshall McLuhan’s media philosophy, through the prism of assemblage theory – a Deleuzian-inspired philosophy of multiplicities systematized over the last decade by Mexican-born thinker Manuel DeLanda. Through an interventionist approach seeking to push McLuhanism beyond its very limits, the article is concerned with a certain dimension of its conceptual body which cannot be accommodated by its own parameters.
    [Show full text]
  • Manuel Delanda, Assemblage Theory (Edinburgh University Press, 2016) Andrew Ball
    parrhesia 29 · 2018 · 241-247 manuel delanda, assemblage theory (edinburgh university press, 2016) andrew ball While Manuel DeLanda’s philosophy is associated with the most cutting-edge in- novations in continental thought, his Assemblage Theory should be considered a work of secondary scholarship that builds upon the concept of assemblage first sketched by Gilles Deleuze and Félix Guattari. DeLanda characterizes his own theory as “an extension of their work” which is deferential to “its value and resil- iency” and remains committed to “preserve and extend Deleuze and Guattari’s insights” (65, 131). Though DeLanda significantly expands on their ideas, conceiv- ing of properties and capacities of assemblages not envisioned by Deleuze and Guattari to develop a comprehensive “ontology of assemblages,” the work is ulti- mately one of creative exegesis that remains grounded in the latter’s philosophy (127). DeLanda begins by elaborating the defining traits of assemblages and the on- tological framework they compose. All assemblages, he explains, are singulari- ties, they are historical and individually unique, and are therefore not “particular members of a general category” (6). Because each is unique, a primary function of assemblage theory is to map the individuation process that has given rise to an assemblage. Unlike the relationalist ontology described in Bruno Latour’s actor- network theory, where each entity is defined by its interactions with other enti- ties—by its capacity to affect and be affected by other entities—DeLanda’s assem- blages consist of parts that remain autonomous and independent of their network of relations. Each part is capable of detaching to form new relations and there- fore assemblages are characterized by “relations of exteriority.” In contrast to the “relations of interiority” that characterize Latour’s assemblages, where relations “define the very identity of the terms they relate,”relations of exteriority are non- constitutive of component parts (2).
    [Show full text]