The Material Production of Virtuality: Innovation, Cultural Geography, and Facticity in Derivatives Markets

In the existing literature, the ‘virtual’ nature of financial derivatives is often commented upon, but how these products are brought into being has seldom been examined in any depth. This article analyzes the development since 1970 of organized financial-derivatives trading in the U.S. and U.K. (in particular, of derivatives exchanges and of the British financial spread-betting industry), with the goal of examining the ‘material production of virtuality’. The article explores the similarities and differences between technological innovation and innovation in derivatives; discusses the role of the ‘internal’ cultures of financial markets and of the wider culture (in particular, the legal traces of hostility to gambling); and analyzes the requirement of ‘facticity’ for the measure underlying a cash-settled derivative, focusing in particular on the most important such measure, British Bankers’ Association LIBOR (London interbank offered rate).