Human specialists, not just networks, were the weak link that broke index arbitrage

Evidence

The network delays on October 19 hampered index arbitrage, and at 9:30 A.M. on October 20 the New York Stock Exchange imposed what was in effect a prohibition on use of DOT for arbitrage (Brady Commission 1988, p. III22). In addition, the ends of the automated chain were human beings: the specialists on the floor of the exchange. It was they who had to turn an index arbitrageur’s DOT order, arriving on printers at all the specialists’ posts at which S&P 500 stocks were traded, into completed transactions. Many were unable or unwilling do to so. They could not find buyers to match with sellers and, with their own capital evaporating, they feared bankruptcy if they stepped in to remedy the imbalance (as their regulatory obligations said they should). — Donald MacKenzie, An Engine, Not a Camera, 827

Categorization

• STORYSTEM: The image of automated trading chains whose terminals are humans, acting under fear of bankruptcy, is a strong fiction seed: a world where the ‘machines’ are people whose discretion and fear throttle a supposedly automatic system.