LOR’s own founders feared their trading would move markets

Evidence

“We had one client come to us who had a huge pension plan,” says Rubinstein. “We wanted to tell that client that was too much money for us to handle. We were just too worried about the impact that the trading would have on the markets.” If LOR refused the client’s business, however, “he’d go somewhere else” to one of the growing number of other firms also offering portfolio insurance (Rubinstein interview). — Donald MacKenzie, An Engine, Not a Camera, 812

Categorization

• CANDY: The inventors of portfolio insurance refusing a client because taking the money on would endanger markets is a compact ironic anecdote.
• XREF: connects to: New derivatives markets initially lacked liquidity and depended on founders’ moral suasion to survive — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 84; Pure rational self-interest cannot explain founding a derivatives exchange; Building financial derivatives exchanges demanded large unpaid, personally costly commitments from organizers — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 671 (+1 more)

Broader Connections

• New derivatives markets initially lacked liquidity and depended on founders’ moral suasion to survive #expands (0.85) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 84
• Pure rational self-interest cannot explain founding a derivatives exchange #corroborates (0.80)
• Building financial derivatives exchanges demanded large unpaid, personally costly commitments from organizers #corroborates (0.80) — Donald MacKenzie, An Engine, Not a Camera, 671
• New financial markets require coercive persuasion of members to create initial liquidity #corroborates (0.78) — Donald MacKenzie, An Engine, Not a Camera, 691