"The Revenge of the Nerds: How the Automation of Stock Markets Impacted the Sociology of the Financial World"

The technological revolution had a strong social impact on human resources in most financial centers throughout the 1970s and 1980s. The rapid automation of stock exchanges and over-the-counter markets sustained fantasies of self-regulating markets and market efficiency. Since it directly competed with open outcry trading, the introduction of computers in the stock markets downplayed the role of market intermediaries and met with strong insider resistance. It created new career opportunities and eliminated ancient tasks: mechanical calculating machines, for instance, replaced women who used to work as human “computers” – a phenomenon not limited to financial markets. Most companies redefined their management structures and business strategy to adapt to the introduction of automated services. High and competitive wages drove students from fields hitherto unknown to the financial sector to join the game and participate in the booming wave of trading. Some pioneering bankers actively involved in the promotion of stock market evolution encouraged the destabilization of old practices and recruited a high number of Ph.D. holders. Indeed, since the introduction of the Black-Scholes pricing formula in 1973, inspired by the equation that governs heat diffusion, financial institutions have hired a growing number of physicists and string theorists to evaluate market risk. The sociological analysis of my paper is based on a prosopographic database of almost 3,000 financiers from more than 20 countries involved in brokerage firms, merchant banks, commercial banks, and asset management firms active in the 1980s. Among the financiers and asset managers of my database, the proportion of individuals who graduated in engineering, natural sciences, mathematics, computer science, or econometrics accounted for 70% of the Ph.D. holders. This paper will focus on the concrete impact of the automation of markets on the sociology of financiers and the consequences on their business practices. From a regulatory point of view, the increasing presence of "quants" also gave leverage to the banks eager to circumvent the role of brokers and jobbers to access the market.