US securities regulators viewed options trading with extreme hostility into the 1970s

Evidence

As CBT officials began to float the idea of options trading with the SEC in the late 1960s, they encountered what they took to be instinctual hostility, based in part upon corporate memory of the role options had played in the malpractices of the 1920s. Sullivan, for example, was told by one leading SEC official that he had “never seen a [market] manipulation” in which options were not involved. When the CBT invited SEC Chair Manuel Cohen and one of his officials to a meeting with Wilson and Sullivan in the Democratic Club, the official told them that there were “absolutely insurmountable obstacles” to their proposal, and they “shouldn’t waste another nickel pursuing it.” He even compared options to “marijuana and thalidomide” (Sullivan interview). — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 61

Categorization

• XREF: Connects to the moral-panic history: as with sumptuary laws and scandals over dress, regulators here treat options as a corrupting substance, contrasting with today’s normalization of derivatives. — connects to: Efficient-markets theory helped legitimate options trading that regulators had long banned — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 62; Pre-1970s options were stigmatized as speculation and market manipulation tools. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 523; Options were once stigmatized securities but posed a tractable normal-science pricing problem — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 140 (+3 more)

Related

• Options trading faced regulatory gambling stigma persisting after exchange opening (similarity 0.83)
• Consulting economists reframed options as legitimate investor strategy for regulatory approval (similarity 0.83)
• Pre-1970s options were stigmatized as speculation and market manipulation tools. (similarity 0.83)
• Efficient-markets theory helped legitimate options trading that regulators had long banned (similarity 0.82)

Broader Connections

• Pre-1970s options were stigmatized as speculation and market manipulation tools. #corroborates (0.92) — Donald MacKenzie, An Engine, Not a Camera, 523
• Options trading faced regulatory gambling stigma persisting after exchange opening #corroborates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 704
• 1960s economists reframed stock options as rational and desirable despite Wall Street’s dismissal #qualifies (0.78) — Donald MacKenzie, An Engine, Not a Camera, 650
• Options were once stigmatized securities but posed a tractable normal-science pricing problem #qualifies (0.75) — Donald MacKenzie, An Engine, Not a Camera, 140
• Consulting economists reframed options as legitimate investor strategy for regulatory approval #responds-to (0.72) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 63