Why hasn't high-frequency trading swept the board? Shares, sovereign bonds and the politics of market structure

Abstract

In today’s trading of liquid financial instruments, there are two main contending agencements (in Callon’s ‘actor-network’ sense of combinations of humans and nonhuman elements that manifest distributed agency): one agencement yokes together automated high-frequency trading (HFT) and open, anonymous electronic order books; the other is organized above all around the distinction between ‘dealers’ and ‘clients’. Drawing upon interviews with 321 market participants, we examine differences in the relative presence of the two agencements. We focus in this article on the processes that have given rise to especially sharp differences between the trading of shares and of sovereign bonds, and between the trading of the latter in the US and Europe. The article contributes to two literatures: the sociological literature on trading (especially on HFT), which we argue needs expanded to encompass what can be called ‘the politics of market structure’; and the nascent political-economy literature on the processes shaping how sovereign bonds are traded. In terms of underlying theory, we advocate far greater attention in actor-network economic sociology to the state and its agencies and a stronger focus in political economy on materiality.