Legal Reasoning in the Global Financial Markets
Who are the agents of financial regulation? Is good (or bad) financial governance merely the work of legislators and regulators? Here Annelise Riles argues that financial governance is made not just through top-down laws and policies but also through the daily use of mundane legal techniques such as collateral by a variety of secondary agents, from legal technicians and retail investors to financiers and academics and even computerized trading programs.
Drawing upon her ten years of ethnographic fieldwork in the Japanese derivatives market, Riles explores the uses of collateral in the financial markets as a regulatory device for stabilizing market transactions. How collateral operates, Riles suggests, is paradigmatic of a class of low-profile, mundane, but indispensable activities and practices that are all too often ignored as we think about how markets should work and be governed. Riles seeks to democratize our understanding of legal techniques, and demonstrate how these day-to-day private actions can be reformed to produce more effective forms of market regulation.
“A brilliant exploration of the legal infrastructure that underlies global financial markets. Combining legal expertise and sociological insight, Professor Riles offers a lucid and illuminating investigation of the role that legal elites in Japan and other developed economies played in reforming legal doctrines to facilitate trillions of dollars of trading in OTC derivatives. While these reforms are often characterized as freeing private markets to shoulder financial risks, Collateral Knowledge persuasively argues—and the global financial crisis confirms—that the legal infrastructure for derivative transactions could not protect private investors from their own folly nor insulate the general public from the consequences of private miscalculation."
“Collateral Knowledge is a complex, clever, stimulating, and ambitious text on an important topic. Annelise Riles upends current debates about regulation and deregulation, private versus public interest, and financial globalization by calling our attention to the unobtrusive yet pervasive technical devices that private actors use to do their business. Innovative and interesting, the book makes a key scholarly contribution while engaging a wide audience concerned with global markets. Collateral Knowledge is a real blockbuster.”
“Collateral Knowledge provides a complex, rigorous, and compelling analysis of collateral—the tools and techniques that are meant to assert that ‘property’ lies somehow behind a financial transaction and underwrites it. Riles shows how the set of legal techniques and knowledges that constitute collateral is centrally implicated in the practices of global finance and in the ideological discourses promoted by figures from Hayek to De Soto on the privatization of public goods and the substitution of law by arbitration. She unpacks collateral’s technicalities, its position in a network of technocratic rationalities and actions, and its political effects in relation to legal process and understandings of law and state in the financial markets.”
“[A] fresh and thought-provoking perspective. . . . Collateral Knowledge is a worthwhile contribution to the discussion of the global financial crisis and the more democratic path we should forge in its wake.”
“Collateral Knowledge surely inspires difficult thinking about private law and financial regulation, using collateral in derivatives markets as a complex and interesting context.”
Introduction. Private Governance, Global Markets, and the Legal Technologies of Collateral
1. What Is Collateral? On Legal Technique
2. The Technocratic State
3. Unwinding Technocracy
4. Placeholders: Engaging the Hayekian Critique of Financial Regulation
5. Virtual Transparency
Conclusion. From Design to Technique in Global Financial Governance