[SOLVED] Market Regulation and Electronic Trading Sociology

[SOLVED] Market Regulation and Electronic Trading Sociology

Paper :
Market Regulation and Electronic Trading Sociology 
“Governments and markets are by definition co-constituted.
That means that large-scale modern markets cannot exist
without the extensive intervention and active engagement
of government. Government helps establish the rules of
the road and gives firms the ability to build stable market
structures.”
—Neil Fligstein (), The Banks Did It
“Like a lot of regulations, Reg NMS was well-meaning and
sensible. If everyone on Wall Street abided by the rule’s
spirit, the rule would have established a new fairness in
the U.S. stock market. . . . Reg NMS was intended to create
equality of opportunity in the U.S. stock market. Instead
it institutionalized a more pernicious inequality. A small
class of insiders with the resources to create speed were
now allowed to preview the market and trade on what they
had seen.”
—Michael Lewis (), Flash Boys
“[I]n the case of US share trading, with its powerful regulator, the Securities and Exchange Commission, it would be
quite mistaken to see regulation as simply an external, autonomous influence on market structure. Interviewees who
had been SEC officials describe how the agency is buffeted
by finance-sector lobbying, by the fallout from financial
crises and scandals, and by spasmodic surges of attention
from the formal political system.”
—Donald MacKenzie (), Trading at the Speed of Light

Using the evolution and development of electronic markets, explain
how regulation shapes markets and their participants. Choose at
least three concrete cases to illustrate your argument.
We have discussed and read about countless examples, and you can
draw on examples ranging from the development of futures/options
in the s and s/s to the foundations of electronic trading
in the s/s to the growth of high-frequency trading up to
the present. Reg NMS is perhaps the most prominent example we’ve
discussed, but we have seen many other examples in which market
participants have battled regulators and each other in order to establish
themselves and their markets and products.
The relationship between markets and regulation connects to many
of the key sociological concepts we’ve discussed, and as in previous
papers, you should apply those concepts where appropriate. Most
recently, for example, we’ve talked regulation as socially constructed,
regulatory capture, regulation as a source of legitimacy, and ideologies
of market efficiency underpinning the struggles over regulation.
Frequently Asked Questions
• What examples can I use? Do they have to be about electronic
trading and HFT? You can use examples from everything we looked
at over the course of the three-week section on the transition to electronic markets. So, for example, you can talk about futures trading
in the s (which didn’t involve computers!) or about the rise of
financial futures in the s. Both of these involve only human
trading, but they’re part of the broader historical backdrop that
we used to talk about the rise of electronic trading. And you can
also use examples from the electronic/HFT era. You do not have to
choose examples from all these different periods; you can choose any
combination of examples from this broad section.
• Is my goal to explain the rise of electronic trading? No. This is
simply the historical case that we’ve focused on to learn in more
detail about the relationship between markets and regulation.
• But if this isn’t about the rise of electronic trading, then what
is my argument? Your argument should be a claim about the relationship between markets and regulation. You might argue that
markets and regulation shape each other; you might argue that regulation simply gets in the way of free markets; you might argue

that regulation happens entirely at the behest of powerful market
participants and has no independent role in shaping markets; or
you might argue something in between all of these things. Based on
the argument you choose to make, you should then select at least
three detailed empirical examples that illustrate the way that (you
argue) markets and regulation are related. The details you include
in your examples should focus on how regulation (and regulators)
interact with markets (and market participants); again, you do not
need to provide a narrative of the rise of electronic trading. (Reg
NMS is one example mentioned in the prompt; you can choose any
examples that you can connect to the relationship between markets
and regulations/regulators.)
• What’s up with the three quotes at the beginning of this assignment? Those are meant to be examples of some different perspectives
we’ve seen on the relationship between markets and regulation. They
are intended to get you thinking more broadly about how markets
and regulation fit together and also to give you some ideas about
what kinds of examples are relevant to the paper.
Length and Formatting
Your paper should be – words. (This is about – doublespaced pages.) Be clear and concise; you will not be rewarded for
padding your word count with unnecessary words and sentences.
You do not need to include a title page or even a title. Just write
your name, Paper , and your TA’s name and section time at the top.
You should double-space your paper. All other default settings
should be fine (-point font, -inch margins); we won’t nitpick about
these things, since the paper length is defined by word count, not by
number of pages. Use a professional-looking, readable font (Garamond,
Times New Roman, Palatino, Arial, or similar).
Essays will be graded on a numerical scale. Style counts, so please
proofread and edit your essay carefully.
References and Quotations
You do not need to include a “References” or “Bibliography” section
for this paper, since you’ll be using readings directly from the syllabus.
You may use direct quotations from the readings to support your
arguments. You should keep these short (probably no more than a sen-

tence or two in any given quote). For the most part, you should explain
things in your own words, but sometimes the reading summarizes
something concisely better than you can paraphrase it, and a direct
quotation makes more sense. You should put these quotations inside
quotation marks, followed by the author’s name, year of publication,
and page number in parentheses. For example: “Social institutions
create mental maps of the world in individuals” (Dobbin , pg. ).
How To Submit Your Paper
You should submit your paper in either PDF or Word (.doc or .docx)
format. You’re welcome to use any word-processing program that
you like. Unfortunately, Blackboard only supports Microsoft Word
directly, so if you use LATEX, LibreOffice, Pages, Markdown, or some
other alternative, convert your document to a PDF before submitting.
You should submit your paper directly on Blackboard. Refer to the
syllabus for policies on submission, late work, and the use of late days,
but one reminder here: please remember that it is your responsibility to verify that you have a receipt from Turnitin confirming that
your submission has been uploaded. If you have technical problems
with Blackboard and send us a last-minute email to tell us about it, be
sure to attach your paper to your email so we can accept it on time.
(You should not send us a link to an online share such as Google Docs,
which will not count as a submission; you should include your paper
as an email attachment.) Remember that late days are cumulative, so
if you already used some or all of your late days on the first two assignments, make sure you don’t exceed the total limit of seven days for
the semester on this paper. (You can check how many late days you’ve
used through the grade center on Blackboard.)
Other Sources of Help
Don’t forget about the USC Writing Center. You can go online and book
an appointment. They will not only help improve your papers, but
booking an appointment in advance will force you to get something
done before your appointment so you won’t be writing your paper at
the last minute!


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