ABSTRACT
This chapter examines several features of the financial system that involve issues of standardization and what is termed ‘risk dispersion’. Risk dispersion refers to the way certain technologies for dealing with risk have the effect of dispersing it rather than eliminating it. To scatter risk implies both to redistribute it so that no one party bears the full burden of it and – at the systemic level – to reduce its overall impact so that the system becomes more robust. The argument is that such dispersion strategies enhance financial security. The substantive analysis of this chapter opens with a discussion of security in its various guises. Then it moves directly to a consideration of standards and the process of standardization. This raises several general issues associated with the characteristics of standards, which serve to establish a framework for that subsequent analysis of types of standardization to be found in the commercial world and the financial system. Thus, this part of the chapter provides a discussion of matters that have a wider significance for consideration of standards beyond the financial system. The way these various issues impact upon the commercial world and financial arrangements is woven into the discussion as the analysis proceeds, but near the end a specific (and rather particular) sense of standardization is investigated in the context of algorithmic trading in particular. This involves recognizing that standardization can be the consequence of the informal adoption of a codified social norm rather than just the result of a formal process of overt construction and implementation.
