Derivative markets grew from near-zero to systemically central in seventeen years

Evidence

In 1970, the market in financial derivatives in the United States and elsewhere was very small by today’s standards (there are no reliable figures for its total size), and to trade many of today’s derivatives, such as the Merc’s S&P 500 futures, would have been illegal. By 1987, derivatives played a central role in the U.S. financial system, which is why the fate of the Mercantile Exchange was so critical to that system. Derivatives markets were also beginning to emerge around the world. — Donald MacKenzie, An Engine, Not a Camera, 31

Categorization

• XREF: connects to: Financial derivatives grew from obscurity to $108 trillion notional value in three decades; New derivatives markets initially lacked liquidity and depended on founders’ moral suasion to survive — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 84; Bond derivatives markets expanded arbitrage opportunities from the mid 1970s onward — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 959 (+4 more)

Broader Connections

• Derivatives inverted from insurance into engines that increase volatility exposure. #expands (0.82) — Aris Komporozos-Athanasiou, Speculative Communities, 91
• Option theory infrastructure allows derivatives markets to exist at current scale #expands (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1138
• Bond derivatives markets expanded arbitrage opportunities from the mid 1970s onward #expands (0.75) — Donald MacKenzie, An Engine, Not a Camera, 959
• Derivatives do not reflect risk but actively produce contingencies and value #expands (0.75) — Aris Komporozos-Athanasiou, Speculative Communities, 390