Markets, Bodies, and Rhythms: A Rhythmanalysis of Financial Markets from Open-Outcry Trading to High-Frequency Trading

By Borch, Christian; Hansen, Kristian Bondo et al. | Environment and Planning D: Society and Space, December 2015 | Go to article overview

Markets, Bodies, and Rhythms: A Rhythmanalysis of Financial Markets from Open-Outcry Trading to High-Frequency Trading


Borch, Christian, Hansen, Kristian Bondo, Lange, Ann-Christina, Environment and Planning D: Society and Space


Abstract

This article explores the relationship between bodily rhythms and market rhythms in two distinctly different financial market configurations, namely the open-outcry pit (prevalent especially in the early 20th century) and present-day high-frequency trading. Drawing on Henri Lefebvre's rhythmanalysis, we show how traders seek to calibrate their bodily rhythms to those of the market. We argue that, in the case of early-20th-century open-outcry trading pits, traders tried to enact a total merger of bodily and market rhythms. We also demonstrate how, in the 1920s and '30s, market observers began to respond to a widely perceived problem, namely that market rhythms might be contagious and that some form of separation of bodily and market rhythms might therefore be needed. Finally, we show how current high-frequency trading, despite being purely algorithmic, does not render the traders' bodies irrelevant. Yet high-frequency trading does change the role of the body rather than seeking to attune their bodies to the markets, high-frequency traders seek to calibrate their bodies to their algorithms. While the article demonstrates the usefulness of deploying Lefebvre's rhythmanalysis in analyses of financial markets, it also suggests that high-frequency trading in particular might produce new types of market rhythms that, contra Lefebvre, do not revolve around traders' bodies.

Keywords

Bodies, contrarian speculation, financial markets, high-frequency trading, Lefebvre, rhythmanalysis

Introduction

It is evident to most observers that financial markets have undergone profound transformations during the past century. Whereas the hub of market activity used to be the open-outcry pit, in which traders competed for the best orders in an often loud and hectic body-to-body environment, the main market activity of the present takes place via computers, either by traders interacting via their screens or through algorithmic trading, in which preprogrammed algorithms place specific orders according to market flows, and without any human intervention. This development seems to suggest a growing detachment between bodies and markets, rendering the operations of the latter largely independent of bodily aspects. To some extent, it is accurate to describe the development in such terms. Yet, as we shall argue in this article, the situation is in fact more complex and ambiguous. We will demonstrate this by analyzing markets and their transformations in terms of their rhythms, which will allow us to examine how bodies and markets interrelate in various market configurations. Theoretically and analytically, we will center our investigation on Henri Lefebvre's rhythmanalysis, because it (1) foregrounds the role of the body and (2) offers an explicit attempt to understand and examine the connections between bodies and capitalism.

Empirically, we study two radically opposed incarnations or configurations of financial markets, namely the open-outcry pit, where, as mentioned, traders are placed in bodily proximity; and high-frequency trading (HFT), i.e. fully automated, computerized trading, in which orders are executed by algorithms and traders rarely interact. (1) HFT executes trades at very high speed, typically in micro- or even nanoseconds. According to some estimates, 48.5% of all US equity trading today is HFT (Cheplick, 2014), which suggests that whereas open-outcry pit trading used to be at the center of the financial markets, today this position seems to be occupied by HFT. And although HFT might appear to render bodies irrelevant, we argue that, even in an era of automated trading, the bodies of traders need to be calibrated to market rhythms.

The article is structured as follows. In the first section, we present and discuss the central ideas of Fefebvre's rhythmanalysis. The second section outlines our methodological approach, i.e. how we deploy Fefebvre's rhythmanalysis in order to understand financial markets. …

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