Contemplating Electronic Mediation: What Makes CBOT Face-to-Face Trading Work?

Designing a computer-mediated communication system to replace a face-to-face (f-2-f) process is a complex undertaking. It is necessary to determine which of the behaviors are critical to the operation of the process and which are inefficiencies to eliminate. This requires that behaviors be understood in terms of their intent or function within the goal structure of the process. We explore this issue for a face-to-face futures market whose management is contemplating an electronic version of the market. Our examination of the intent of traders' behavior raises two important issues that will need to be addressed in any electronic re-design. First, can the social fabric that enables collaboration to occur under conditions of competition and cooperation be supported in an electronic medium? Second, will the removal of inefficiencies inherent in the f-2-f process by a new electronic system destroy the very basis for the operation of the market?