Frames and screens: the reduction of uncertainty in electronic derivatives trading

The article is concerned with problems of ‘framing’ in electronic derivatives markets. Traders in any given trading environment ‘frame’ or interpret information about the market by drawing on a range of other information, knowledge and heuristics. Such framing reduces uncertainty. In an open outcry market environment, framing information would be flowing in the social networks of that market environment. In electronic markets, traders do not interact with their counterparts and are generally disembedded from the social networks of the open outcry environment. Other ways of framing therefore have to be found. The article examines various ways in which this happens. The article also suggests, however, that framing in an electronic market environment remains difficult and that electronic trading therefore creates incentives to do other forms of trading as well, such as block trading, where there is more personal interaction, and where frames can therefore be re-established more easily.