Sunshine trading emerged from risk managers seeking to distinguish mechanical trades from informed ones

Evidence

The idea of sunshine trading predated the crash. It emerged from a conversation between John O’Brien and the futures broker Steven Wunsch of Kidder Peabody, who were discussing the fact that LOR’s futures trades were large and that they had to be made. O’Brien puts it this way: “If the market drops this much, we have to trade. It’s not a matter of us saying Well, gee, this is not a good time to trade."' The solution O'Brien and Wunsch came up with "was something [for which] we then came up with the name sunshine trading.’ We said, what we’ll do, we’ll go down to the floor of the futures exchange, we’ll announce an hour beforehand that we’re going to sell $10 million of futures at 11 o’clock.” (O’Brien interviewL2) The obvious objection was that a sunshine trader would be “front run”: others would sell futures ahead of them, in order to profit from a decline in price brought on by the pre-announced sale. — Donald MacKenzie, An Engine, Not a Camera, 877

Categorization

• DEFINE: Defines sunshine trading as pre-announced mechanical trades designed to prevent being misread as information-bearing.
• XREF: Connects to the performativity thesis: market participants redesign behavior around transparency to avoid the very misreading that crash models describe. — connects to: Trading more volatile stocks made mental pricing calculations riskier and models indispensable — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 750

Broader Connections

• Trading more volatile stocks made mental pricing calculations riskier and models indispensable #complicates (0.72) — Donald MacKenzie, An Engine, Not a Camera, 750