Tag: banking

Excerpt: Donald MacKenzie, Material Markets

It is of course the exotic nature of pit trading that makes its embodiment stand out. As pits have declined, they have been replaced by screen-based trading, and trading by telephone already has a long history. It’s particularly easy implicitly to posit a disembodied actor when studying such trading, because the bodily actions involved are mostly familiar to any office worker. Much of the time, for instance, one would be hard pushed to distinguish between the physical actions of a trader in a bank’s dealing room from those of an academic at his or her desk. […]

Bodily capacities still matter, however. Let me again use example of LIBOR, which is pertinent here because it is an apparently disembodied set of numbers. […] the inputs to the LIBOR calculation come from bank dealing rooms, but they are heavily influenced by interdealer brokers. Although brokers increasingly give their clients the capacity to trade electronically, the core of their business was (and to a significant extent still is) ‘voice broking’. A firm’s brokers in a given market (for example, the sterling interbank market) sit close together at a cluster of desks, with nearby clusters handling related markets such as in interest-rate swaps. Each broker has on his desk (it is another predominantly male niche) a ‘voicebox’ — a combination of [p.12] microphone, speaker, and switches — connected by dedicated telephone lines to each of his clients.

Interdealer brokers do not themselves trade: if a client bank wants to borrow money, the broker’s job is to find a bank that will lend (or vice versa). So the key skill is knowing who wants to do what who is prepared to do what […]

There’s also, however, a crucial bodily skill in interdealer broking, a skill those involved call ‘broker’s ear’: the capacity aurally to monitor what is being said by all the other brokers at a cluster of desks, while oneself holding a voicebox conversation with a client. […]

While interviewing brokers at their desks, I sometimes found ‘broker’s ear’ disconcerting. Someone could apparently be paying full attention to his conversation with me, when he would suddenly respond to a comment or question from five or six desks away that I simply hadn’t heard […]

[T]here’s no fully algorithmic way of generating an appropriate LIBOR output. Judgement, based on an understanding of market conditions, is involved, and the broker’s ear is one bodily foundation of that judgement.

From Donald MacKenzie, Material Markets: How Economic Agents are Constructed (Oxford University Press, 2009), pp.11-12.

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