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Abstract
In its emphasis on the legal technicalities this article is concerned with materiality of financial markets – a key theme in social studies of finance. The paper insists on the importance of local legal culture by articulating this concept in distinction to politics. Focusing on the Amendment to Article 1062 of the Russian Civil Code concerning an important class of financial products – cash-settled currency derivatives – it synthesises the insights of actor-network theory and finitism, and argues that local legal culture is a composite of both distributed agencies and interpretative acts.
ACKNOWLEDGEMENTS
I am deeply grateful to my interviewees for sharing their time and thoughts. I would like to thank Donald MacKenzie, Kimberley Masson, Miriam Snellgrove, and two anonymous JCE referees for their insightful suggestions and helpful comments. However, I maintain full responsibility for my views expressed in the paper.
Notes
1. A cash-settled forward contract is an obligation to buy or sell a certain currency at a fixed price (exchange rate) on a determined date in the future, but when the time to execute the contract comes, instead of delivering the currency, the parties settle the difference between the current and the contacted exchange rate. The contract will be explained in more detail later in this article.
2. For more accounts on the legitimisation of gambling see also Swan (Citation2000), O'Malley (Citation2003).
3. On the SSF-materiality link and genesis of social studies of finance see MacKenzie (Citation2009).
4. The confidentiality of the information was not a straightforward matter. All but one of the interviewees yielded a ready consent to their names being revealed. However, in the process of transcribing the interviews, it became clear that often the informants had been very candid about fairly sensitive issues, such as, for instance, the politics of decision-making processes in the Federal Assembly of the Russian Federation. After careful consideration, in order to do no harm to the informants, it has been decided to keep all the interviewees anonymous. For more detail on the interviews, see the Appendix.
5. The omission of the term ‘legal culture’ could be attributed to the author's position: through identifying two communities among legal scholars – the ‘culturalists’ (and those considering law ‘the outcome of political compromise’ are among them) and ‘instrumentalists’ (who perceive law as an implement used for a particular purpose) – Riles (Citation2005) puts forward a new subject: ‘the technical’.
6. That such ‘cultures’ are typically seen as very local means that the wider controversies (especially in anthropology) concerning the concept of culture, cultural essentialism, orientalism, etc., have been little taken up in SSF (though see MacKenzie Citation2011a).
7. A forward contract traded on an exchange is called a ‘futures contract’ and if a price of a forward is the same over the contract duration, the price of the futures contract is marked-to-market, or evaluated daily on an exchange. Also, unlike a forward, a futures contract is standardised, a ready-to-buy/sell instrument that is not affected by the counterparties’ guarantee of performance since it is the concern of an exchange's clearinghouse.
8. By the autumn of 1998, the outstanding notion value of the deals was variously estimated between $6.5 and $365 billion (Ippolito Citation2002; Tompson Citation2002)
9. The Federal Financial Markets Service (FFMS) was established in 2004; its predecessor, the Federal Securities Market Commission (FSMC) was involved in the regulatory controversy until the formation of FFMS.
10. The Russian economic reform of 1993 is also known as the voucher privatisation. It served the aim of transferring ownership of enterprises from the state to its citizens, whereby the government issued and distributed privatisation vouchers, which were securities that denoted shareholdings in an enterprise. The Russians could either sell the vouchers or retain their shares.
11. My interviewee sounds rather sarcastic here because he did not support the idea of the Law, yet I introduced the quote to illustrate that the Law was seen as doing it the ‘American’, or ‘Anglo-Saxon’ way, in order to introduce the Bank of Russia's position in the regulatory contest.
12. ISDA is the International Swaps and Derivatives Association, a consortium of over-the-counter derivatives market participants that joins forces of ‘815 members from 58 countries on six continents’ (ISDA Citation2012).
13. Few of my interviewees have acknowledged that the main reason for classifying cash-settled derivatives as bets was political expedient. However, the very fact that the political measure was performed by employing gambling law confirms the still-strong link between the two – non-deliverable derivatives trading and betting.
Additional information
Notes on contributors
Sveta Milyaeva
Sveta Milyaeva studied sociology at the University of Edinburgh. She is currently based at the University of Edinburgh, where she teaches sociology, social and political theory, and conducts research on the sociology of financial markets and legal expert knowledge in derivatives markets.