Financial insider talk in the city of London

Aeron Davis

Introduction

This chapter primarily focuses on private, exclusive forms of communication in London's financial networks. Its starting point is that multiple, internal forms of talk fulfill some vital communicative functions for elite participants. Such internal exchanges, which are very intense and in varied modes, produce 'City' forms of cultural cohesion and outsider exclusion. Each of these is important for sustaining the City's economic and political advantages. First amongst these, at least in the minds of participants, is the need to keep up with daily financial information flows and opinions. The communicative networks of the City are key to disseminating price-sensitive information and producing consensus trading decisions on a daily basis. It keeps insiders ahead of the investment curve (or not far behind) and leaves outsiders trailing in their wakes.

However, insider communication also serves other, less conscious and immediately instrumental functions. One of these is the generation of medium-term investment narratives and fashions. These, which include such things as the 'new economy', 'hi-tech' stocks or new trading and market philosophies, spur larger market movements over a few years. Sometimes these can aid the creation of bubbles and crashes, and with wider social and economic consequences. At a third level, comes the long-term generation of a financial market ideology that underpins beliefs, behaviours and discursive practices. This, in turn, is then exported to non-financial 'stakeholder elites', such as politicians, public company CEOs and pension funds. It is used to legitimate all market practices while delegitimizing non-market actors and institutions. It is also used to discipline states, economies and publics, remaking them, God-like, in the image of financial markets themselves. Thus, private forms of insider communication are central to the profitable workings of financial sectors, and to the maintenance of financial market power in contemporary, financialized states.

The discussion is in three parts. The first documents the communicative architecture and networks of London's financial districts. The second describes the everyday, instrumental communication that drives financial activity and pushes investment decisions. It then goes on to explain how the same exchanges and practices also create medium-term narratives and fashions that then have come to underpin new investment trends, sometimes leading to bubbles and crashes. The third, sketches the parameters of the longer-term financial market ideology that has come to dominate in recent decades and in spite of system shocks. The discussion draws on previous periods of interview-based research with fund managers, analysts, investor relations specialists and financial journalists.

Internal communication flows and financial cultures

The City, as with other financial centres, is an extremely rich and dense communication environment. Information, research and communicative exchange lies at the heart of finance as numerous decisions are made every minute of the trading day. In fact, gaining and circulating financially relevant information is a practical imperative for properly functioning financial markets. Such a goal supports financial market theory as well as attracting market participants for practical reasons.

At one level, much financial information and communication is publicly available and widely disseminated. Such information and business news coverage has expanded considerably in the post-war period (Parsons 1989; Tumber 1993; Tunstall 1996; Cassidy 2002). Standard regulations demand that companies release important financial information about themselves through the London Stock Exchange (LSE). Everyone, insider or outsider, has access to Regulatory News Service (RNS) of the LSE, either directly or via a news wire service. Everyone in the City also reads the Financial Times and other leading financial news publications. However, in many ways, public media are of decreasing importance in daily investment activity in the financial sector. For professional financiers publicly available information is of little use when everyone has it. To get ahead, private information and analysis is more useful. In the electronic age, public news media is far too slow to be useful to professionals. Similarly, those in the financial world rely relatively little on information they pick up from the 'amateur' observers of the media. Business and finance are highly complex topics that most journalists struggle to understand and keep up with (see Davis 2002; Doyle 2006; Tambini 2010). Public news media does serve some useful functions for insiders, as I will explain below, but its importance is longer-term, cultural and ideological.

Far more significant to financial insiders, on the day-to-day level, are the many varied forms of private communication networks and mediums. When investigating these alternatives (Davis 2002), a decade ago, I found there were over 90 exclusive financial print publications circulated in the City. On top of this, thousands of stockbroking ('sell-side') and fund management ('buy-side') analysts produced and circulated regular research reports. There are also many specialists, financial information suppliers, offering analysis at high subscription rates. In addition, there are a range of real-time electronic information feeds and database services that collate and summarize market information and trading activities in any sector.

Private, face-to-face meetings, conversations and phone calls are more intense and focused still. Analysts, brokers, public and investor relations specialists, journalists, fund managers and others are all involved in multiple dialogues every day. Many exchanges consist of formal meetings, for example, between company CEOs and fund managers (see also Holland 1997; Marston 1999). When interviewing fund managers it...