Futures markets need infrastructure beyond self-interested participants to succeed

Evidence

A futures market brings together “hedgers” (for example, producers or large consumers of the grain or other commodity being traded), who benefit from being certain of the price at which they will be able to sell or to buy the grain, and “speculators,” who are prepared to take on risk in the hope of profiting from price fluctuations. However, successful futures trading requires more than the existence of economic actors who may benefit from it. — Donald MacKenzie, An Engine, Not a Camera, 69

Categorization

• XREF: The hedger/speculator distinction plus the claim that markets need more than willing actors pushes toward the performativity thesis and echoes the reader’s knowledge of how CBOE options markets were deliberately constructed. — connects to: New financial markets require coercive persuasion of members to create initial liquidity — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 691; Option theory infrastructure allows derivatives markets to exist at current scale — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1138; Markets require abstract standardized assets that may not physically exist yet. (+3 more)

Broader Connections

• New financial markets require coercive persuasion of members to create initial liquidity #exemplifies (0.85) — Donald MacKenzie, An Engine, Not a Camera, 691
• Standardized futures contracts let traders exit obligations without the original counterparty #exemplifies (0.85) — Donald MacKenzie, An Engine, Not a Camera, 74
• Performativity has real limits; markets still need culture and trust #corroborates (0.85) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 25
• Option theory infrastructure allows derivatives markets to exist at current scale #exemplifies (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1138
• Markets require abstract standardized assets that may not physically exist yet. #expands (0.80)
• Markets act as cognitive prostheses enabling outcomes beyond individual rationality #corroborates (0.75) — Donald MacKenzie, An Engine, Not a Camera, 1206