Taking the FloorModels, Morals, and Management in a Wall Street Trading Room

Taking the FloorModels, Morals, and Management in a Wall Street Trading Room

Daniel Beunza

Print publication date: 2020

ISBN: 9780691162812

Publisher: Princeton University Press

Abstract

Debates about financial reform have led to the recognition that a healthy financial system does not depend solely on how it is structured—organizational culture matters as well. Based on extensive research in a Wall Street derivatives-trading room, this book considers how the culture of financial organizations might change in order for them to remain healthy, even in times of crises. In particular, the book explores how the extensive use of financial models and trading technologies over the recent decades has exerted a far-ranging and troubling influence on Wall Street. How have models reshaped financial markets? How have models altered moral behavior in organizations? The book takes readers behind the scenes in a bank unit that, within its firm, is widely perceived to be “a class act,” and it considers how this trading room unit might serve as a blueprint solution for the ills of Wall Street's unsustainable culture. It demonstrates that the integration of traders across desks reduces the danger of blind spots created by models. Warning against the risk of moral disengagement posed by the use of models, the book also contends that such disengagement could be avoided by instituting moral norms and social relations. The book profiles what an effective, responsible trading room can and should look like.