Distributed Execution in Illiquid Times: An Alternative Explanation of Trading in Financial Markets

Sociologists and other social scientists typically characterize financial markets as ‘liquid’, where capital can be readily purchased or sold in global electronic networks, so that trades can be completed nearly instantaneously. In contrast, drawing on ethnographic interviews in an emerging market, Malaysia, and on cross-national statistics, secondary survey data and econometric studies, this article argues that world stock markets are normally illiquid with temporal spikes of liquidity. As a consequence, professional investors in equities markets are large and frequently slow-moving behemoths, trading turgidly. To overcome illiquidity, professional investors conduct a range of practices I term distributed execution. Illiquidity and distributed execution have a number of implications for sociological debates regarding the relationship between investment firms and society.