Mark W. Geiger, "Floor Rules: Insider Culture in Financial Markets" (Yale UP, 2024)

Oct 29, 2024

Mark W. Geiger, an independent scholar of economic history, discusses his book, 'Floor Rules: Insider Culture in Financial Markets.' He reveals how insider norms, or 'floor rules,' play a crucial role in the trading world, often dictating behavior more than formal regulations. Geiger shares thrilling stories, like that of B.P. Hutchinson’s dramatic 1888 wheat market corner and the manipulative tactics of the LIBOR scandal. He also touches on the aggressive culture within financial markets and the essential connections that influence success among traders.

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Intro

00:00 • 5min

The Floor Rules of Trading

05:21 • 13min

Power Struggles on the Trading Floor

18:03 • 4min

Connections in Financial Markets

22:12 • 15min

The LIBOR Scandal Unveiled

37:06 • 10min

The Profane Language of Financial Market Insiders

47:18 • 3min

The Culture of Finance: Aggression and Adaptation

50:01 • 23min

Are financial markets lawless and irrational? It may seem that way from the outside, but for market insiders there are multiples sets of rules that they break at their peril.

Official rules set by law or by the exchanges exist alongside unofficial rules, or floor rules. Between these, it is the floor rules -- the norms followed by other insiders -- that matter most. Breaking an official rule might lead to a fine or even jail. Breaking floor rules can lead to being ostracized from markets as well as social and financial ruin.

In Floor Rules: Insider Culture in Financial Markets (Yale UP, 2024), Mark W. Geiger tells compelling stories of market disturbances in which insider rules played a key role. He examines the norms, customs, values, and operating modes of insiders at the center of financial markets that trade money, stocks, bonds, futures, and other financial derivatives. These core insiders are a relatively small group who govern the markets.

The book tells the riveting story of Benjamin Hutchinson, who made national news for his dramatic 1888 wheat market corner in Chicago, in which he outsmarted four powerful traders who had joined to force him out of the market, survived a life-threatening physical assault on the trading floor, and almost brought down the Chicago wheat market.

It also unpacks the LIBOR scandal of 2008 in which bankers in major international firms manipulated interbank loan rates to inflate their own profits at the expense of investors and at tremendous risk to the industry.

Geiger analyzes the cultural history of market trading, describes the role of insiders, and suggests where this peculiar, ingrown culture is heading in an era of technological change.

The book releases on October 29, the 95th anniversary of the Black Tuesday crash of 1929, the beginning of the Great Depression.

Related resources:

Mark Geiger's personal website and portfolio of generative AI artwork

Author recommended reading:

Den of Thieves by James B. Stewart
Phishing for Phools: The Economics of Manipulation and Deception by George A. Akerlof and Robert J. Shiller

Hosted by Meghan Cochran

NOTE: Kluge Fellow at the Library of Congress should have been pronounced with a hard "g" as in kloo-ghee.

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