The market as a moving timeworld and the flow architecture of this timeworld

I now want to address the flow architecture of foreign exchange markets which has been made possible by the GRS. The notion of a flow, as I shall use the term, responds to the aggregate properties the market acquired after being put on screens and to the global processual qualities of this market.

KK: I want to come back to the market, what the market is for you. Does it have a particular shape?

LG: No, it changes “shape” all the time.

Traders perform their activities in a moving field constituted by changing dealing prices, shifting trading interests (the indicative prices), scrolling records of the immediate past that are continually updated, incoming conversational requests, newly projected market trends, and emerging and disappearing headline news, commentaries and economic analyses. In other words, they perform their activities in a temporal world; the market itself is intrinsically dynamic and processual and the global reflex system of financial screens displays, enhances and accelerates the market process and its dynamic properties. As the information scrolls down the screens and is replaced by new information, a new market reality continually projects itself. The constantly emerging lines of text at times repeat the disappearing ones, but they also add to them and replace them, updating the reality in which traders move. The market as a “greater being”, as an empirical object of ongoing

From pipes to scopes 133 activities and effects, continually transforms itself like a bird changing direction in mid-flight, creating the anticipation problem traders confront. From one point of view, a defining characteristic of a financial market is its non-identity with itself.

Historically, markets were marketplaces, physical locations where buyers and sellers were able to meet and coordinate their interests (e.g. Agnew 1986: 18). Likewise, our concepts of an everyday reality tend to be spatial concepts. We see reality as an environment that exists independently of us and in which we dwell and perform our activities. The very notions of a lifeworld and of a world on screen as used so far in this chapter also suggest spatiality; they suggest that the idea of a spatial environment can be extended to electronic domains as these become - for some of us - a place to work and live. The problem with these notions in regard to time is that they imply that time is something that passes in these spatial environments but is extraneous to the environment itself. We relate the existence of a lifeworld, of an environment, or of everyday reality more to the physical materiality of a spatial world than to any temporal dimension. We also express, one assumes, the durability of the physical world compared with the human lifespan through spatializing concepts. The point is that the screen reality discussed has none of this durability. It is more like a carpet of which small sections are rolled out in front of us.

This formulation suggests that what I have called the global reflex system - and particularly its screen component - is necessary for this flow reality to emerge: it is through the performative and presentational capabilities of the GRS mechanism and its information feeds that the market acquires the properties of an aggregate entity and, while being performed and reflexively analysed and projected, takes on the character of a stream of things moving forward as a whole. We also need to distinguish here between participating financial flows and the composite reality of

a flowing market. Traders sometime contrast “taking a view” of a market develop­ment, which is subjective, with having concrete information about what they call “orders” and “flows”, which is objective, since orders and flows are constitutive components of financial markets. Financial orders refer to requests for trades once the price of a financial instrument reaches a certain level; when an order is executed, it becomes a flow. Financial flows refer to volumes of a financial instrument changing positions and accounts; in accounting terms, flows are distinguished from “non-changing” objects in that they must be expressed in terms of a time interval (Houthakker and Williamson 1996: 9).

Participants’ understandings of flows can be related to common notions of flow which we should briefly consider. Social scientists tend to associate the term flow either directly with (1) things travelling or (2) fluidity. The first idea responds to the increased mobilities of contemporary life (Urry 2000: 15-16, 36-7). It gives expression to the phenomenon that it is not only people that commute, travel, and migrate in seemingly ever-increasing numbers, but that messages and information also move. It is particularly the travelling of communications that underpins the idea of a network society as one based on flows of information (e.g. Castells 1996). This idea is important, but it does not quite capture what happens in the case of financial flows. In currency trading, financial flows refer to payments that imply adjustments of accounts. No physical transfers of money need take place for this purpose; what flows in the sense of something being transferred is financial (market, payment, etc.) power as an abstract capacity rather than actual money. The payments are important to market participants because they influence price levels, as indicated. The changes that occur and concern participants in response to financial flows pertain to the market as centrally composed of price levels. Also changing in conjunction with large financial flows may be market stories, commentaries, and analyses, headline news, trend extrapolations, and the like - all belonging to the level of the market as presented on screen.

The second meaning of flow found in the literature is that of fluidity; it draws on the distinction between liquids and solids. For example, analysts who emphasize fluidity conceptualize the current stage of modernity as marked by a transition from more solid forms of order and tradition to structures that are more liquid and fluid, or that are melting, as in Marx’s famous phrase that “all that is solid melts into air” (e.g Berman 1982; Bauman 2000). The liberalization of traditional education exemplifies this trend, as does the deregulation of markets, the

From pipes to scopes 135 flexibilization of labour and the breakdown and replacement of traditional family relations (e.g. Lasch 1978). This idea of the “melting of the solid” comes closer to the one used here, but the point about the screen reality as a flow is not that it is nomadic (without itinerary) and unmarked by the traces of social and economic structure. The point is the projection and reconstitution of this reality as one that is continually emerging in a piecemeal fashion. One can compare it to a text that is in the process of being written simultaneously by many authors, that is composed in the process of writing out numerous different components, and that reaches no further than the contributor’s pen. It is the emergence of this market text in episodic pieces, contemporaneously with the agent’s activity and the short duration of the text, that the notion of a flow as used here is intended to capture. I also suggest that it is possible to retain notions such as that of a world while remaining aware of the scrolling change of this particular world. The screen that rolls out the lifeworld in which traders move nonetheless presents such a lifeworld; it presents a complex environment composed of “walkable” regions and horizons that ground activities. The ground may be shifting continually and the lifeworld is “in flight”.

If markets are continually changing processes with variable time attributes, they can also be viewed as time contexts that move across space, or to be precise, across time zones. Here the global character of financial markets, particularly of currency markets, becomes important. One can see these markets as moving in and out of time zones continually with the sun, and as they do, of taking on different features and updating their positions. As global entities, markets have their own instrument- and clock-related characteristics that characterize them in the aggregate. For example, markets have characteristic “speeds” indicated by the price movements which are at the centre of a changing market process. In currency spot trading, which is the direct exchange of currencies, prices tend to change within split seconds during periods of average activity. As a consequence, the currency trading timeworld moves forward at a breathtaking pace. Another attribute is the liquidity of a market, which in this context indicates the speed with which a financial instrument can be bought or sold, without significant price changes. Markets will be “thin” (have few participants willing to trade) at certain times and “deep” at others, with market liquidity varying over time. Markets also undergo seasonal variations, for example, periods of low trading volume during the holiday season in December, when the accounting end of the year draws close. When markets are conceived as moving across time zones, additional features become relevant, underscoring their character as moving entities and timeworlds. To make this character plausible, I want to consider the following aspects of global markets, focusing again on the foreign exchange market as the most developed global market. A first set of characteristics refers to the temporal unity of these markets: they

keep their own clock and times and they have their own global schedules and calendars. A second characteristic of these markets is that they are globally “exclusive” systems that have left behind their natural embeddedness in local and physical settings. This point will allow me to address the architecture of these markets as based on bridgehead centres in the three major time zones. My final point illustrates the working of a flow architecture as one where such centres play “bridging” and mediating roles in giving support to a moving market and in updating and forwarding the market on a time zone trajectory.

A first feature that ties into the view of global foreign exchange markets as moving time contexts is that they follow their own time, which is Greenwich Mean Time (GMT). Greenwich Mean Time, the time and date of the zero meridian which runs through Greenwich, England, was adopted as a universal standard in November 1884 during the meeting of the International Meridian Conference in Washington, DC, USA. This conference drew up an international date line and created 24 time zones. Prior to that, the United States alone had over 300 local times (see Zerubiavel 1982: 12-13 for its interesting historical origin). Since these markets have no central location, time is fixed to a particular coordinate of the globe to assure global identification of the correct transaction date. If this were not the case, a transaction in New York requiring delivery in Sydney two days later and the receiving side in Sydney might not register the same delivery date. But this also means that the respective markets carry their own time reckoning with them. As an aggregate of positions, orders, flows, and travelling “books” (accounts), they remain independent of local time zones. A further aspect of the temporality of global markets is “calendars” and schedules: dates and hours set for important economic announcements and for the release of periodically calculated economic indicators and data. These calendars and schedules structure and pace participants’ awareness and anticipation. They originate in a particular world region and the respective time zones; for example, the data might be released in the US at Eastern standard time and they will consist of national statistics referring, for example, to the US, or of aggregate statistics referring to a group of nations, as with European Union data. But calendars and schedules from all three major time zones are relevant and will be listed in daily and weekly market “schedules”. These schedules “anchor” market developments in national or regional economies’ fundamental characteristics. Yet as transnational!/ relevant collections of time points that punctu­ate and dramatize the ordinary temporal flow of market events and observations, they also belong to the disembedded timeworld of global markets.

This disembedding is the second feature I want to discuss. It too sustains the notion of global markets as moving timeworlds. Giddens uses the notion of disembedding to refer to the “lifting out of social relations from local contexts” (Giddens 1990: 21-9). I use the term to refer to the phenomenon that the markets observed appear removed from their local context in terms of participants’ orientation, their inherent connectivity and integration as the key to overcoming the geographical separation between participants, their rules of trading practices, their forms of compensation, and the like (see Knorr-Cetina and Bruegger 2002a for an overview of these characteristics). To give some examples, market participants

From pipes to scopes 137 (e.g. traders) are disembedded in the sense that they are oriented toward one another across time zones rather than toward the local environment. They remain oriented to the translocal environment even after their working hours, continuing to watch the market that has moved on to another time zone through handheld Reuters’ instruments and TV channels. An important feature that points beyond this global orientation is what has been called elsewhere the reciprocal interlocking of time dimensions among traders as a means for achieving a level of intersubjectivity in global fields. What holds participants together across space is a “community of time” rather than a community of space, as in traditional societies. This community of time comes about, for example, by market participants on dispersed trading floors watching the market virtually continuously in synchronicity and immediacy for the duration of their working (and waking) hours.⁴ All three aspects are important here: synchronicity refers to the phenomenon that traders and salespeople observe the same market events simultaneously over the same time period; continuity means they observe the market virtually without interruption, having lunch at their desks and asking others to watch when they step out; and temporal immediacy refers to the immediate real-time availability of market transactions and information to participants within the appropriate institutional trading networks. Traders may also see themselves as belonging to global professional communities and they exhibit similar lifestyles across continents. Another disembedding feature are the rules of trading practice which are not covered by national law but correspond to a lex mercatoria (a rule of trading practices) holding among participants on a global level, and reinforced in trading interactions without recourse to formal law.

Going beyond disembeddedness and asking what “supports” a market that moves freely across time zones, one can point to the trading floors in global cities where the moving market resides during time zone hours, becomes further articulated and defined, and then moves on to the next time zone. To begin, let me draw a distinction between a globally inclusive and a globally exclusive cultural form. A globally inclusive financial marketplace would be one where individual investors in any country are able to trade assets freely across national boundaries. Such a system requires, among other things, the computer penetration of investor locations (e.g. households), language capabilities or unification, Web architectures, payment and clearing arrangements between exchanges, regulatory approvals, and national pension and insurance systems that support individual financial planning. Such systems are in the process of being created in some regions, but they are far from being in place on a worldwide basis. On the other hand, in the area of institutional trading considered in this chapter, a global market of a different kind has been in evidence for some time. This form of globality is not based upon the penetration of countries or of individual behaviour. Instead, it rests on the establishment of bridgehead centres of institutional trading in the financial hubs of the three major time zones: in New York, London, Tokyo, and Zurich, Frankfurt or Singapore. The moving market “rests” in these bridgehead centres where it becomes articulated and revised. The bridgehead centres contribute to the markets’ continuation by the trading activities of their “market makers” (the traders who take their own

positions in the market), the activities of their salespersons, and others. These activities support the market, which becomes anchored in the time-zone-specific global reflex systems of trading floors. The activities also change the market, and this contributes to the notion of the market as a flow in the sense introduced before, and as a moving timeworld. Participants coming to work in New York in the morning will not be confronted with the same market they left at the end of their previous working day. They will see an updated version of this market, one that bears the mark of the events happening in the intermediate time zones of Asia and Europe. In addition, these markets will arrive “whole”, at every new time zone and take off “whole” to the next one. This is somewhat simplified, but let us see what one might mean by such a statement. When traders arrive at their desks in the morning in Tokyo and open their screens they will find summary accounts of what happened before in the New York time zone - these accounts are encap­sulated in closing rates, index values, volume statistics, intraday trading trends, etc. They will also find more qualitative summaries relayed to them by their contacts in the earlier time zone in their conversational dealing screens. In addition, traders themselves will make efforts to find out more about market developments in the earlier time zone by listening to relevant news services at home, calling friends, or contacting them via the conversational dealing system before and while they begin dealing. Most major institutional trading floors also have morning meetings where such information is reported, analysts’ summaries prepared in another time zone are transmitted over intercoms, and on-floor analysts and economists relate their assessment of the situation. Similarly, at Tokyo closing time, traders and analysts in this time zone will transmit summary information to contacts, bulletin boards, and other outlets in the next (European) time zone and they may be contacted by those working there via phone or electronic mail for specific and concrete information. The European (London, Zurich, Frankfurt) and American (New York) time zones overlap by several hours (New York institutional trading starts at 8 am, which is 2 pm Central European Time). In response to the overlap between the European and North American opening hours, the markets will not “move on” immediately but will trade simultaneously until Europe closes - the markets tend to get “hectic” at these times just as they will be “silent” when Tokyo is not yet very active and New York has closed. When the European closing time approaches, the same sort of summarizing and forwarding described earlier will take place. The overlap between Europe and the US corresponds to a “time gap” between the US (New York) andJapan (Tokyo) provoked by the larger time difference between these cities where no or little trading takes place in both time zones. Traders in the same institution, dealing in the same instrument (say currency options), may cooperate across time zones when longer-term contracts are involved (e.g. options) and positions cannot be closed at the end of a trading day. In this case, the market’s move to the next time zone may involve the transfer of a “global book” - an electronic record of all contracts entered, including those added and structured in the forwarding time zone. Global books incorporate particular philosophies of trading whose content and adaptation to time-zone-specific circumstances will be

From pipes to scopes 139 discussed in similar beginning- and end-of-day global conversations between traders in different zones.