Notes

Preface

1. Michel Serres, Genesis, trans. Genevieve James and James Nielson (1982; repr., Ann Arbor: University of Michigan Press, 1997), 59.

2. Michael Lewis, Flash Boys: A Wall Street Revolt (New York: W. W. Norton, 2015); Scott Patterson, Dark Pools: The Rise of Machine Traders and the Rigging of the U.S. Stock Market (New York: Crown Business, 2013).

3. See, e.g., Karin Knorr-Cetina and Alex Preda, eds., The Sociology of Financial Markets (London: Oxford University Press, 2005); Donald MacKenzie, Fabian Muniesa, and Lucia Siu, eds., Do Economists Make Markets? On the Performativity of Economics (Princeton, N.J.: Princeton University Press, 2007); Donald MacKenzie, Material Markets: How Economic Agents Are Constructed (Oxford: Oxford University Press, 2009); and Trevor Pinch and Richard Swedberg, eds., Living in a Material World: Economic Sociology Meets Science and Technology Studies (Cambridge, Mass.: MIT Press, 2008).

4. Two exceptions to this are Franco “Bifo” Berardi, The Uprising: On Poetry and Finance, Intervention Series 14 (Los Angeles, Calif.: Semiotext(e), 2012), and Frances Dyson, The Tone of Our Times: Sound, Sense, Economy, and Ecology (Cambridge, Mass.: MIT Press, 2014).

5. Robin Mackay and Armin Avanessian, eds., #ACCELERATE#: The Accelerationist Reader (Falmouth, U.K.: Urbanomic, 2014).

6. Joseph Vogl, “Taming Time: Media of Financialization,” trans. Christopher Reid, Grey Room 46 (2012): 73.

Noisy Efficiency

1. Fischer Black, “Noise,” Journal of Finance 41, no. 3 (1986): 530.

2. Philip Mirowski, Machine Dreams: Economics Becomes a Cyborg Science (Cambridge: Cambridge University Press, 2002).

3. Quotations in this paragraph are from F. A. Hayek, “The Use of Knowledge in Society,” The American Economic Review 35, no. 4 (1945): 519 (emphasis original), 526, 520–21, and 527, respectively.

4. Fischer Black and Myron Scholes, “The Pricing of Options and Corporate Liabilities,” Journal of Political Economy 81, no. 3 (1973): 637–54; Robert C. Merton, “Theory of Rational Option Pricing,” The Bell Journal of Economics and Management Science 4, no. 1 (1973): 141–83.

5. Philip Mirowski, More Heat Than Light: Economics as Social Physics: Physics as Nature’s Economics (Cambridge: Cambridge University Press, 1989).

6. Donald MacKenzie, An Engine, Not a Camera: How Financial Models Shape Markets (Cambridge, Mass.: MIT Press, 2006), 37–67.

7. Milton Friedman, “The Methodology of Positive Economics,” in Essays in Positive Economics (Chicago: University of Chicago Press, 1953), 14–15.

8. Ibid., 19, emphasis original.

9. On why these unrealistic assumptions did not bother many supporters of these models, see MacKenzie, An Engine, Not a Camera, 9–12.

10. Friedman, “Methodology of Positive Economics,” 10.

11. Andrew W. Lo, introduction to Market Efficiency: Stock Market Behaviour in Theory and Practice, ed. Andrew W. Lo (Cheltenham, U.K.: Edward Elgar, 1997), 1:xviii.

12. Eugene F. Fama, “Efficient Capital Markets: A Review of Theory and Empirical Work,” Journal of Finance 25, no. 2 (1970): 387, emphasis original.

13. Ibid., 399n22.

14. Michael C. Jensen, “Some Anomalous Evidence Regarding Market Efficiency,” Journal of Financial Economics 6, nos. 2–3 (1978): 95, quoted in MacKenzie, An Engine, Not a Camera, 95.

15. MacKenzie, An Engine, Not a Camera, 94–98; Daniel Kahneman and Amos Tversky, “On the Psychology of Prediction,” Psychological Review 80, no. 4 (1973): 237–51; Kahneman and Tversky, “Prospect Theory: An Analysis of Decision under Risk,” Econometrica 47, no. 2 (1979): 263–92.

16. Quotations in the paragraph are from Black, “Noise,” 529 (emphasis added), 530, and 530, respectively.

17. Quotations in the paragraph are from ibid., 531, 532, 533.

18. Andrei Shleifer and Lawrence H. Summers, “The Noise Trader Approach to Finance,” Journal of Economic Perspectives 4, no. 2 (1990): 26.

19. J. Bradford DeLong, Andrei Shleifer, Lawrence H. Summers, and Robert J. Waldmann, “Noise Trader Risk in Financial Markets,” Journal of Political Economy 98, no. 4 (1990): 706.

20. J. Bradford DeLong, Andrei Shleifer, Lawrence H. Summers, and Robert J. Waldmann, “The Survival of Noise Traders in Financial Markets,” Journal of Business 64, no. 1 (1991): 17.

21. Brad M. Barber, Terrance Odean, and Ning Zhu, “Systematic Noise,” Journal of Financial Markets 12, no. 4 (2009): 547–69.

22. Anonymous Hedge Fund Manager and Keith Gessen, Diary of a Very Bad Year: Confessions of an Anonymous Hedge Fund Manager (New York: HarperPerennial, 2010).

23. Keith Gessen, “HFM Redux, Part Two,” December 16, 2010, http://nplusonemag.com/hfm-redux-part-two.

Affectual Noise in the Pits

1. Ananth Madhavan and Venkatesh Panchapagesan, “Price Discovery in Auction Markets: A Look inside the Black Box,” Review of Financial Studies 13, no. 3 (2000): 638.

2. For more on the history of this transition, see Patterson, Dark Pools.

3. My account in the next few paragraphs draws heavily from Zaloom’s work as well as documentaries such as Floored (dir. James Allen Smith, 2009). See Caitlin Zaloom, Out of the Pits: Traders and Technology from Chicago to London (Chicago: University of Chicago Press, 2006), and for Floored, see Trader Film LLC, “About—FLOORED,” 2009, http://flooredthemovie.com/community/, and JCL’s Forex, “Floored: Into the Pit—Epic Trader Movie!,” May 11, 2012, https://www.youtube.com/watch?v=tCcxr-fyF4Q.

4. Attempts are under way to document these signals as open-outcry trading fades in importance and is presumed to eventually disappear altogether. See Debrouillard Group, “Trading Pit History,” n.d., http://tradingpithistory.com/. The futures pits at the Chicago Board of Trade Building, owned by the CME Group, were scheduled to close in July 2015. See William Alden, “As Silence Falls on Chicago Trading Pits, a Working-Class Portal Also Closes,” New York Times, March 24, 2015, http://mobile.nytimes.com/2015/03/25/business/dealbook/as-silence-falls-on-chicago-trading-pits-a-working-class-portal-also-closes.html.

5. Zaloom, Out of the Pits, 150.

6. Joshua D. Coval and Tyler Shumway, “Is Sound Just Noise?,” Journal of Finance 56, no. 5 (2001): 1890.

7. Ibid., 1909–10.

8. Ibid., 1890.

9. Gregory J. Seigworth and Melissa Gregg, “An Inventory of Shimmers,” in The Affect Theory Reader, ed. Melissa Gregg and Gregory J. Seigworth (Durham, N.C.: Duke University Press, 2010), 1, emphasis original.

10. Brian Massumi, Parables for the Virtual: Movement, Affect, Sensation (Durham, N.C.: Duke University Press, 2002), 30, emphasis original.

11. Constantina Papoulias and Felicity Callard, “Biology’s Gift: Interrogating the Turn to Affect,” Body and Society 16, no. 1 (2010): 37.

12. Clare Hemmings, “Invoking Affect: Cultural Theory and the Ontological Turn,” Cultural Studies 19, no. 5 (2005): 548–67.

13. Elite Trader Forums, “Forum—Floor Squawk Box?,” August 23, 2006, http://www.elitetrader.com/vb/showthread.php?threadid=75425.

14. TrueSquawk, “TrueSquawk.com Live Futures Coverage,” 2015, http://www.truesquawk.com/; TradeTheNews.com, “Live Stock Market Forex News Expert Market Analysis—TradeTheNews.com,” February 9, 2015, http://www.tradethenews.com/.

15. Robert Harris, The Fear Index (New York: Alfred A. Knopf, 2012), 198. To my knowledge, further academic studies regarding the use—or nonuse—of these squawk boxes does not exist.

16. Tracy Alloway, “More Bad News from Merrill, Squawkbox Edition,” March 11, 2009, http://ftalphaville.ft.com/blog/2009/03/11/53471/more-bad-news-from-merrill-squawkbox-edition/.

17. For more on the use of the telephone in trading, see Fabian Muniesa, “Trading-Room Telephones and the Identification of Counterparts,” in Pinch and Swedberg, Living in a Material World, 291–313.

18. U.S. Securities and Exchange Commission, “Administrative Proceeding Release No. 34-59555,” March 11, 2007, 3.

19. Ibid., 7.

20. Gary Gensler, then chairman of the U.S. Commodity Futures Trading Commission (CFTC), quoted in Michael Mackenzie and Aline van Duyn, “Regulators May Silence Derivative Squawk Boxes,” Financial Times, July 21, 2010, http://www.ft.com/intl/cms/s/0/cce3f6e4-94f8-11df-af3b-00144feab49a.html.

Algorithmic Noise Producing Noisy Profits

1. Ionut Florescu, as quoted in Frank J. Fabozzi, Sergio M. Focardi, and Caroline Jonas, “High-Frequency Trading: Methodologies and Market Impact,” Review of Futures Markets 19 (2011): 13.

2. Anonymous, “1Q 2010 NJ Office, Industrial Markets Mixed,” April 14, 2010, http://newyork.citybizlist.com/article/1q-2010-nj-office-industrial-markets-mixed-0. As far as I am able to discover, only the name of the city, but not this exact address, appears on the website of the NYSE. The size of the NYSE data center puts it on par with those recently built by Apple, Facebook, and the data center under construction in Utah for the NSA; on the latter, see James Bamford, “The NSA Is Building the Country’s Biggest Spy Center (Watch What You Say),” March 15, 2012, http://www.wired.com/threatlevel/2012/03/ff_nsadatacenter/all/1.

3. For one history of this development, see Patterson, Dark Pools.

4. http://www.batstrading.com/ and https://www.batstrading.co.uk/about/. BATS now owns Chi-X Europe, which is separate from Chi-X Global.

5. Marc Lenglet, “Conflicting Codes and Codings,” Theory, Culture, and Society 28, no. 6 (2011): 48.

6. For more on these shifts in the equity markets, see Dave Cliff, Dan Brown, and Philip Treleaven, “Technology Trends in the Financial Markets: A 2020 Vision,” Future of Computer Trading in Financial Markets—Foresight Driver Review DR 3 (2010): 5–14; for derivatives markets in the United States, see Thomas J. McCool and Cecile O. Trop, Commodity Exchange Act: Issues Related to the Regulation of Electronic Trading Systems, General Accounting Office report GGD-00-99 (Washington, D.C.: Government Printing Office, 2000), http://www.gao.gov/assets/230/229069.pdf.

7. Peter Gomber, Björn Arndt, Marco Lutat, and Tim Uhle, “High-Frequency Trading,” working paper commissioned by the Deutsche Börse Group, 2011, 21–23.

8. Ibid., 14.

9. Andrew G. Haldane, “The Race to Zero,” speech given to the International Economic Association Sixteenth World Congress, Beijing, China, July 8, 2011, http://www.bankofengland.co.uk/archive/Documents/historicpubs/speeches/2011/speech509.pdf.

10. Donald MacKenzie, “How to Make Money in Microseconds,” London Review of Books 33, no. 10 (2011): 16–18; J. Doyne Farmer and Spyros Skouras, “An Ecological Perspective on the Future of Computer Trading,” Future of Computer Trading in Financial Markets—Foresight Driver Review DR 6 (2010).

11. Spread Networks, “Spread Networks® Collocation Centers,” specifications sheet, 2011, 2.

12. Sebastian Anthony, “New Laser Network between NYSE and NASDAQ Will Allow High-Frequency Traders to Make Even More Money,” Extreme Tech (blog), February 14, 2014, http://www.extremetech.com/extreme/176551-new-laser-network-between-nyse-and-nasdaq-will-allow-high-frequency-traders-to-make-even-more-money.

13. A. D. Wissner-Gross and C. E. Freer, “Relativistic Statistical Arbitrage,” Physical Review E 82, no. 5 (2010): 056104; James J. Angel, “Impact of Special Relativity on Securities Regulation,” Future of Computer Trading in Financial Markets—Foresight Driver Review DR 15 (2011).

14. Olivia Solon, “GPS ‘Spoofers’ Could Be Used for High-Frequency Financial Trading Fraud,” Wired, February 22, 2012, http://www.wired.co.uk/news/archive/2012-02/22/gps-spoofing.

15. Gomber et al., “High-Frequency Trading,” 15.

16. For more on these strategies, see Gomber et al., “High-Frequency Trading,” 24–31.

17. Bruno Biais and Paul Woolley, “High Frequency Trading,” preliminary paper (2011), 8–9. The recent Dodd-Frank act to “overhaul” the financial system in the wake of the crisis would seem to outlaw the practice of spoofing; see Silla Brush and Asjylyn Loder, “CFTC Told Disruptive Trading Rules Threaten Market Liquidity,” December 2, 2010, http://www.bloomberg.com/news/2010-12-02/commodities-regulators-told-disruptive-trading-rules-threaten-liquidity.html. However, in practice, it is very difficult actually to detect this activity.

18. Eric Scott Hunsader, “What’s Wrong with the Stock Market? Here Mr. Berman, This Is Fraud (Made from SEC Data),” February 11, 2015, https://twitter.com/nanexllc/status/565525073885663232.

19. Commodity Futures Trading Commission and U.S. Securities and Exchange Commission, “Findings Regarding the Market Events of May 6th, 2010,” report of the Staffs of the CFTC and SEC to the Joint Advisory Committee Emerging Regulatory Issues, September 30, 2010.

20. Criminal charges have been brought against a British trader, Navinder Singh Sarao, in connection with his alleged manipulation of the market prior to, and on the day of, the Flash Crash. While governmental prosecutors claim that this arrest is proof of their hard line against market manipulation, others believe that Sarao is merely a scapegoat for more systemic issues that I highlight later. See Nathaniel Popper and Jenny Anderson, “Trader Arrested in Manipulation That Contributed to 2010 ‘Flash Crash,’” New York Times, April 21, 2015, http://www.nytimes.com/2015/04/22/business/dealbook/trader-in-britain-arrested-on-charges-of-manipulation-that-led-to-2010-flash-crash.html; Rajiv Sethi, “The Trader as Scapegoat,” New York Times, April 28, 2015, http://mobile.nytimes.com/2015/04/28/opinion/the-trader-as-scapegoat.html.

21. For another take on the sequence of these events, see MacKenzie, “How to Make Money in Microseconds.”

22. Commodity Futures Trading Commission and U.S. Securities and Exchange Commission, “Findings Regarding the Market Events of May 6th, 2010,” 1–8.

23. See, e.g., David Easley, Marcos M. López De Prado, and Maureen O’Hara, “The Microstructure of the ‘Flash Crash’: Flow Toxicity, Liquidity Crashes, and the Probability of Informed Trading,” Journal of Portfolio Management 37, no. 2 (2011): 118–28; Gomber et al., “High-Frequency Trading”; Joel Hasbrouck and Gideon Saar, “Low-Latency Trading,” Johnson School Research Paper Series 35-2010, 2011; Andrei Kirilenko et al., “The Flash Crash: The Impact of High Frequency Trading on an Electronic Market,” working paper, 2011.

24. Foresight Project, “The Future of Computer Trading in Financial Markets,” working paper, U.K. government Office for Science, 2011, 9–12. A contrary perspective can be found in Frank Zhang, “High-Frequency Trading, Stock Volatility, and Price Discovery,” 2010, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1691679. Zhang’s result is dismissed by the authors of the Foresight report on methodological grounds.

25. Nathaniel Popper, “On Wall Street, the Rising Cost of Faster Trades,” New York Times, August 13, 2012, https://www.nytimes.com/2012/08/14/business/on-wall-street-the-rising-cost-of-high-speed-trading.html. For Hendershott’s previous positions, see Terrence Hendershott, Charles M. Jones, and Albert J. Menkveld, “Does Algorithmic Trading Improve Liquidity?,” Journal of Finance 66, no. 1 (2011): 1–33; Terrence Hendershott and Ryan Riodan, “Algorithmic Trading and Information,” NET Institute Working Paper 09-08, 2011.

26. Dave Cliff and Linda Northrop, “The Global Financial Markets: An Ultra-Large-Scale Systems Perspective,” Future of Computer Trading in Financial Markets—Foresight Driver Review DR 4 (2010); Farmer and Skouras, “An Ecological Perspective.”

27. Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable (New York: Random House, 2007).

28. Fabozzi et al., “High-Frequency Trading,” 8.

29. Palace Chan, “Statistics—What Exactly Is Meant by ‘Microstructure Noise’?,” November 11, 2011, http://quant.stackexchange.com/questions/2360/what-exactly-is-meant-by-microstructure-noise.

30. Fabozzi et al., “High-Frequency Trading,” 11, 19.

31. Ravi Jagannathan, quoted in ibid., 16.

32. Frederi Viens, quoted in ibid., 17.

33. Nikolaus Hautsch, quoted in ibid., 18.

34. Tyler Durden, “MUST HEAR: Panic and Loathing from the S&P 500 Pits,” Zero Hedge (blog), May 7, 2010, http://www.zerohedge.com/article/panic-and-loathing-sp-500-pits. Zero Hedge is a group blog with most posts signed anonymously by “Tyler Durden,” a character from the novel Fight Club.

35. rybn, “ANTIDATAMINING,” n.d., http://www.antidatamining.net/.

36. rybn, “ANTIDATAMINING VIII,” February 9, 2015, http://rybn.org/ANTI/ADM8/.

37. rybn, “FLASHCRASH SONIFICATION,” n.d., http://rybn.free.fr/ANTI/FLASHCRASH.html.

38. Alexandra Supper, “The Search for the ‘Killer Application’: Drawing the Boundaries around the Sonification of Scientific Data,” in Oxford Handbook of Science Studies, ed. Trevor Pinch and Karen Bijsterveld, 249–70 (Oxford: Oxford University Press, 2011).

39. The data are available from http://www.nanex.net/20100506/FlashCrashAnalysis\_Intro.html. Free access to this kind of detailed data is rare and thus, absent Nanex’s posting of it online, the sonification would have been expensive and perhaps impossible to produce.

40. Quotations in this and the following paragraph come from rybn, e-mail interview with the author, April 27, 2012.

41. Lise Autogena and Joshua Portway, Black Shoals Stock Market Planetarium, catalog published in conjunction with the exhibition from February 6 to April 12, 2004, Copenhagen Contemporary Art Center.

42. Brian Holmes, “Is it Written in the Stars? Global Finance, Precarious Destinies,” ephemera: theory and politics in organization 10, nos. 3–4 (2010): 222–33.

43. Lise Autogena, “Lise Autogena,” n.d., http://research.ncl.ac.uk/sacs/projects/Autogena4.html.

44. An exception to this is ADM8, discussed previously, as it required direct access to the market to execute the trades.

45. Holmes, “Is It Written in the Stars?,” 224.

46. Rita Raley, Tactical Media (Minneapolis: University of Minnesota Press, 2009), 149.

47. Cefn Hoile, Black Shoals: Evolving Organisms in a World of Financial Data, n.d. 1.

48. Raley, Tactical Media, 149.

49. Steve Goodman, Sonic Warfare: Sound, Affect, and the Ecology of Fear (Cambridge, Mass.: MIT Press, 2009), 196. It should go without saying that this is a pun on Georges Bataille’s notion of “base materialism.”

Noisy Accelerationism

1. Ccru, “Swarmachines,” n.d., http://www.ccru.net/swarm1/1_swarm.htm.

2. Benjamin Noys, “Accelerationism,” No Useless Leniency (blog), October 20, 2008, http://leniency.blogspot.com/2008/10/accelerationism.html.

3. Steven Shaviro, No Speed Limit: Three Essays on Accelerationism, Forerunners: Ideas First (Minneapolis: University of Minnesota Press, 2015).

4. Most dramatic, of course, is Marx’s contention, in the “Fragment on Machines” of the Grundrisse, that humans will merely become the “conscious linkages” of machines. See Karl Marx, Grundrisse: Foundations of the Critique of Political Economy, trans. Martin Nicolaus (1939; repr., London: Penguin Classics, 1973), 690–712.

5. Gilles Deleuze and Félix Guattari, Anti-Oedipus: Capitalism and Schizophrenia, trans. Robert Hurley, Mark Seem, and Helen R. Lane (1972; repr., Minneapolis: University of Minnesota Press, 1983), 33.

6. Ibid., 239–40.

7. Gilles Deleuze and Félix Guattari, A Thousand Plateaus: Capitalism and Schizophrenia, trans. Brian Massumi (1980; repr., Minneapolis: University of Minnesota Press, 1987), 160.

8. Deleuze and Guattari, Anti-Oedipus, 151.

9. Lyotard, quoted in Iain Hamilton Grant, introduction to Libidinal Economy, trans. Iain Hamilton Grant (Bloomington: Indiana University Press, 1993), xviii.

10. Lyotard, Libidinal Economy, 11, emphasis original.

11. Ibid., 115–16, emphasis original.

12. Ibid., 259.

13. Benjamin Noys, The Persistence of the Negative: A Critique of Contemporary Continental Theory (Edinburgh: Edinburgh University Press, 2010), 8.

14. For one of the few in-depth articles on the Ccru, see Simon Reynolds 1999 article “Renegade Academia: The Cybernetic Culture Research Unit,” Energy Flash (blog), November 3, 2009, http://energyflashbysimonreynolds.blogspot.com/2009/11/renegade-academia-cybernetic-culture.html. Besides Land and Plant, the Ccru also included, at various points, many writers, artists, and musicians who are well known today: Steve Goodman, Kodwo Eshun, Luciana Parisi, Robin MacKay, and Mark Fischer, among others.

15. Sadie Plant and Nick Land, “Cyberpositive,” in Unnatural: Techno-Theory for a Contaminated Culture, ed. Matthew Fuller (London: Underground, 1994), n.p. This text is also available online; see http://www.sterneck.net/cyber/plant-land-cyber/index.php.

16. Nick Land, “Machinic Desire,” Textural Practice 7, no. 3 (1993): 478, 480, reprinted as Nick Land, “Machinic Desire,” in Fanged Noumena: Collected Writings 1987–2007 (Falmouth, U.K.: Urbanomic, 2011), 337, 340. On a personal note, in going back to this text of Land’s, I realized that I had quoted from it on my blog on the very day of the Flash Crash.

17. Nick Land, “No Future,” in Fanged Noumena, 397.

18. Nick Land, “Meltdown,” in ibid., 447.

19. Benjamin Noys, Malign Velocities: Accelerationism and Capitalism (Alresford, U.K.: Zero Books, 2014), 103.

20. Ibid., 101.

21. Ibid., 103.

22. Shaviro, No Speed Limit, 3.

23. Alex Williams and Nick Srnicek, “#Accelerate: Manifesto for an Accelerationist Politics,” in Mackay and Avanessian, #ACCELERATE#, 347–62.

24. Ibid., 360. For Shaviro’s critiques, see No Speed Limit, 16–20.

25. Nick Srnicek and Alex Williams, “On Cunning Automata: Financial Acceleration at the Limits of the Dromological,” Collapse 8 (2014).

26. Ibid.

27. As Shaviro notes, even for Marx, “a tendency is always accompanied by ‘counteracting factors’ which can inhibit or even reverse it.” See Shaviro, No Speed Limit, 3.

28. Patricia Reed, “Seven Prescriptions for Accelerationism,” in Mackay and Avanessian, #ACCELERATE#, 524, 525.

29. Ibid., 527.

30. Berardi, Uprising.