Cash-settled derivatives were legally classed as gambling in the US until the 1980s
Evidence
The legitimatory role of economics in regard to the development of derivatives markets has been particularly clear-cut. As chapter 1 noted, as recently as 1970 markets in financial derivatives were either non-existent or (by today’s standards) small-scale, and many current financial derivatives were illegal. Derivatives were haunted by the impression, held not only by lay people but by many market regulators, that they were simply wagers on the movement of prices. This was not merely a general obstacle to the development of derivatives markets. The way in which the legal distinction between gambling and legitimate futures trading had been drawn in the United States made cashsettled derivatives contracts illegal, and, as noted in chapter 6, until the 1980s this blocked the emergence of stock-index derivatives such as index futures and index options. — Donald MacKenzie, An Engine, Not a Camera, 1134
Categorization
- XREF: Connects to the broader financialization literature on derivatives’ legal status and to MacKenzie’s own chapter 1 and 6 claims. — connects to: Cash-settled index futures were barred by legal logic until decades into the century — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 58; Physical delivery once legally distinguished futures trading from gambling. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 761; Economists’ endorsement legitimated derivatives markets that regulators viewed as gambling — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1135 (+2 more)
Broader Connections
- Options trading faced regulatory gambling stigma persisting after exchange opening
#expands(0.82) — Donald MacKenzie, An Engine, Not a Camera, 704 - Economists’ endorsement legitimated derivatives markets that regulators viewed as gambling
#qualifies(0.75) — Donald MacKenzie, An Engine, Not a Camera, 1135 - Neoliberalism inverted the moral status of gambling from vice to virtue
#corroborates(0.72) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 345