Traders manipulate spreads, delays, and prices within a status-governed relational market.

Evidence

For example, traders can increase the spread between the bid and the sell price to diminish their risk; they can delay their response, hoping, perhaps, that a caller will lose interest; they can simply limit their participation when the market goes against them; and they can tinker with the price (e.g., offer a price for a currency that they expect to go up that is higher than that which the market is currently offering, to induce others to sell to them and allow them to “go long” on an article that will be in demand; traders may also drive the price in a particular direction when they can “read” the counterparty’s intention). However, consistently shaping the response in some of these ways may have relationship costs: a trader may lose prestige and his or her good reputation and may no longer be contacted. Then again, conforming to the code may also be problematic under some circumstances; for example, when a caller wants to distribute a trade across several banks and contacts them simultaneously, a trader who responds fast may lose. The counterparty may wait until all prices are in before disclosing the deal, not wanting a fast trader to learn about it early and make similar moves, which might destroy the market for the caller. — Karin Knorr Cetina & Urs Bruegger, Global Microstructures, 117

Categorization

• XREF: The strategic delay and price-tinkering tactics echo the information-asymmetry dynamics in screen-based market ethnographies on the reading list. — connects to: Market makers profit from the buy-sell spread by providing liquidity. — Kean Birch, Rethinking Value in the Bio-economy:…, 121; Trading-floor talk is dominated by dealing and information exchanges. — Karin Knorr Cetina & Urs Bruegger, Global Microstructures: The Virtual…, 57; Unscheduled events also punctuate market flow and refocus global attention — Karin Knorr Cetina & Urs Bruegger, Global Microstructures: The Virtual…, 97 (+6 more)

Related

• Trading-floor talk is dominated by dealing and information exchanges. (similarity 0.80)
• Traders depend on continuous information commerce, not search, to act in split seconds (similarity 0.80)
• Traders disclose order flow through deals to read the market as it forms (similarity 0.79)

Broader Connections

• Traders disclose order flow through deals to read the market as it forms #expands (0.85) — Karin Knorr Cetina & Urs Bruegger, Global Microstructures, 140
• Customers become tradeable assets under cartel allocation agreements #exemplifies (0.85)
• Markets can be performatively constructed by agents who are not atomistic homo economicus #expands (0.80) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 25
• Market-sharing cartels need practical mechanisms like queues and turns #complicates (0.75) — Diego Gambetta, The Sicilian Mafia The Business of…, 529
• One-shot trade games yield cheating as the unique equilibrium. #qualifies (0.72) — PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE OF…, 46