Michael Davis

ABSTRACT:The ethics of high frequency trading are obscure, due in part to the complexity of the practice. This article contributes to the existing literature of ethics in financial markets by examining a recent trend in regulation in high frequency trading, the prohibition of deception. We argue that in the financial markets almost any regulation, other than the most basic, tends to create a moral hazard and increase information asymmetry. Since the market’s job is, at least in part, price discovery, we argue that simplicity of regulation and restraint in regulation are virtues to a greater extent than in other areas of finance. This article proposes criteria for determining which high-frequency trading strategies should be regulated.

The eight pieces constituting this Meeting Report are summaries of presentations made during a panel session at the 2011 Association for Practical and Professional Ethics (APPE) annual meeting held between March 3rd and 6th in Cincinnati. Lisa Newton organized the session and served as chair. The panel of eight consisted both of pioneers in the field and more recent arrivals. It covered a range of topics from how the field has developed to where it should be going, from identification of issues needing further study to problems of training the next generation of engineers and engineering-ethics scholars

How applied should applied ethics be? I take up that question not because it belongs to the past of applied ethics (though it does), but because, given the present, it seems likely to be a part of the future of applied ethics as well. Consider, for example, a recent debate in the journal Bioethics: One of the four papers was titled, “Why Moral Philosophers Are Not and Should Not Be Moral Experts”; another, “Moral Philosophers Are Moral Experts!” In that debate, a “moral expert” was a philosopher who used his knowledge of philosophy to speak with authority on practical questions. In the course of answering my question, I make a number of distinctions: between ethics-as-practice and ethics-as-theory; between ethics-as-morality, ethics-as-afield-of-philosophy, and ethics-as-special standards; and so on. Having thereby narrowed my question to:what can ethics-as-a-field-of-philosophy properly contribute to moral practice? I answer that ethics-as-a-field-of-philosophy can contribute much to moral practice, but only by maintaining a certain distance from it. For example, experts in ethics-as-a-field-of-philosophy—or even experts in all of philosophy—should not on that basis alone undertake to advise on questions of ethics-as-morality or ethics-as-special-standards. Practical experience has something to teach that is not philosophy—sensitivity to context, know-how, judgment, or the like.

This article assumes that a profession is a number of individuals in the same occupation voluntarily organized to earn a living by openly serving a moral ideal in a morally-permissible way beyond what law, market, morality, and public opinion would otherwise require. Our question is whether the concept of profession may have a far wider range than the term, so that, for example, pointing out that a certain language lacks a word for “profession” in our sense, is not enough to show that those who speak the language also lack the concept. We believe the survey of 71 Chinese reported here begins to answer that question. This article has four parts. The first describes who was interviewed, how, when, and so on. The second describes some important features of the survey’s questions, explaining how the questions track the concept of profession. The third part reports and interprets the results relevant to our question. The forth defends a tentative answer to the question with which we began—arguing the survey supports the claim that China has a profession of engineering. This article should serve as a “proof of concept”, that is, a model for similar studies around the world both of engineering and of other occupations thought to be professions.

Perhaps the most common reason science and engineering faculty give for not including “ethics” (that is, research ethics, engineering ethics, or some discussion of professional responsibility) in their technical classes is that “there is no room”. This article 1) describes a technique (“micro-insertion”) that introduces ethics (and related topics) into technical courses in small enough units not to push out technical material, 2) explains where this technique might fit into the larger undertaking of integrating ethics into the technical (scientific or engineering) curriculum, and 3) concludes with some quantified evidence (collected over more than a decade) suggesting success. Integrating ethics into science and engineering courses is largely a matter of providing context for what is already being taught, context that also makes the material already being taught seem “more relevant”.

Most professional societies, scientific associations, and the like that undertake to write a code of ethics do so using other codes as models but without much (practical) guidance about how to do the work. The existing literature on codes is much more concerned with content than procedure. This paper adds to guidance already in the literature what I learned from participating in the writing of an important code of ethics. The guidance is given in the form of “rules” each of which is explained and (insofar as possible) justified. The emphasis is on procedure.

All of finance is now automated, most notably high frequency trading. This paper examines the ethical implications of this fact. As automation is an interdisciplinary endeavor, we argue that the interfaces between the respective disciplines can lead to conflicting ethical perspectives; we also argue that existing disciplinary standards do not pay enough attention to the ethical problems automation generates. Conflicting perspectives undermine the protection those who rely on trading should have. Ethics in finance can be expanded to include organizational and industry-wide responsibilities to external market participants and society. As a starting point, quality management techniques can provide a foundation for a new cross-disciplinary ethical standard in the age of automation.

All of finance is now automated, most notably high frequency trading. This paper examines the ethical implications of this fact. As automation is an interdisciplinary endeavor, we argue that the interfaces between the respective disciplines can lead to conflicting ethical perspectives; we also argue that existing disciplinary standards do not pay enough attention to the ethical problems automation generates. Conflicting perspectives undermine the protection those who rely on trading should have. Ethics in finance can be expanded to include organizational and industry-wide responsibilities to external market participants and society. As a starting point, quality management techniques can provide a foundation for a new cross-disciplinary ethical standard in the age of automation

Our subject is how the experience of Americans with a certain funding criterion, “broader impacts” may help in efforts to turn the European concept of Responsible Research and Innovation into a useful guide to funding Europe’s scientific and technical research. We believe this comparison may also be as enlightening for Americans concerned with revising research policy. We have organized our report around René Von Schomberg’s definition of RRI, since it seems both to cover what the European research group to which we belong is interested in and to be the only widely accepted definition of RRI. According to Von Schomberg, RRI: “… is a transparent, interactive process by which societal actors and innovators become mutually responsive to each other with a view to the acceptability, sustainability and societal desirability of the innovation process and its marketable products .” While RRI seeks fundamental changes in the way research is conducted, Broader Impacts is more concerned with more peripheral aspects of research: widening participation of disadvantaged groups, recruiting the next generation of scientists, increasing the speed with which results are used, and so on. Nevertheless, an examination of the broadening of funding criteria over the last four decades suggests that National Science Foundation has been moving in the direction of RRI

There are many ways to avoid responsibility, for example, explaining what happens as the work of the gods, fate, society, or the system. For engineers, “technology” or “the organization” will serve this purpose quite well. We may distinguish at least nine (related) senses of “responsibility”, the most important of which are: (a) responsibility-as-causation (the storm is responsible for flooding), (b) responsibility-as-liability (he is the person responsible and will have to pay), (c) responsibility-as-competency (he’s a responsible person, that is, he’s rational), (d) responsibility-as-office (he’s the responsible person, that is, the person in charge), and (e) a responsibility-as-domain-of-tasks (these are her responsibilities, that is, the things she is supposed to do). For all but the causal sense of responsibility, responsibility may be taken (in a relatively straightforward sense)—and generally is. Why then would anyone want to claim that certain technologies make it impossible to attribute responsibility to engineers (or anyone else)? In this paper, I identify seven arguments for that claim and explain why each is fallacious. The most important are: (1) the argument from “many hands”, (2) the argument from individual ignorance, and (3) the argument from blind forces. Each of these arguments makes the same fundamental mistake, the assumption that a certain factual situation, being fixed, settles responsibility, that is, that individuals, either individually or by some group decision, cannot take responsibility. I conclude by pointing out the sort of decisions (and consequences) engineers have explicitly taken responsibility for and why taking responsibility for them is rational, all things considered. There is no technological bar to such responsibility

What makes a subject philosophically interesting is hard-to-resolve confusion about fundamental concepts. Engineering ethics suffers from at least three such fundamental confusions. First, there is confusion about what the “ethics” in engineering ethics is (ordinary morality, philosophical ethics, special standards, or something else?) Second, there is confusion about what the profession of engineering is (a function, discipline, occupation, kind of organization, or something else?) Third, there is confusion about what the discipline of engineering is. These fundamental confusions in engineering ethics connect with philosophically interesting work in moral theory, political philosophy, and philosophy of science. Work in these areas may help with the philosophical problems of engineering ethics. But, equally important, work in engineering ethics may help with the philosophical problems in these others fields.

This article evaluates a family of criticism of how engineering ethics is now generally taught. The short version of the criticism might be put this way: Teachers of engineering ethics devote too much time to individual decisions and not enough time to social context. There are at least six version of this criticism, each corresponding to a specific subject omitted. Teachers of engineering ethics do not (it is said) teach enough about: 1) the culture of organizations; 2) the organization of organizations; 3) the legal environment of organizations; 4) the role of professions in organizations; 5) the role of organizations in professions; or 6) the political environment of organizations. My conclusion is that, while all six are worthy subjects, there is neither much reason to believe that any of them are now absent from courses in engineering ethics nor an obvious way to decide whether they (individually or in combination) are (or are not) now being given their due. What we have here is a dispute about how much is enough. Such disputes are not to be settled without agreement concerning how we are to tell we have enough of this or that. Right now we seem to lack that agreement—and not to have much reason to expect it any time soon.

Judgment is central to engineering, medicine, the sciences and many other practical activities. For example, one who otherwise knows what engineers know but lacks engineering judgment may be an expert of sorts, a handy resource much like a reference book or database, but cannot be a competent engineer. Though often overlooked or at least passed over in silence, the central place of judgment in engineering, the sciences, and the like should be obvious once pointed out. It is important here because it helps to explain where ethics fits into these disciplines. There is no good engineering, no good science, and so on without good judgment and no good judgment in these disciplines without ethics. Doing even a minimally decent job of teaching one of these disciplines necessarily includes teaching its ethics; teaching the ethics is teaching the discipline (or at least a large part of it).

Under a grant from the National Science Foundation, the authors (and others) undertook to integrate ethics into graduate engineering classes at three universities—and to assess success in a way allowing comparison across classes (and institutions). This paper describes the attempt to carry out that assessment. Standard methods of assessment turned out to demand too much class time. Under pressure from instructors, the authors developed an alternative method that is both specific in content to individual classes and allows comparison across classes. Results are statistically significant for ethical sensitivity and knowledge. They show measurable improvement in a single semester.

Both of us have been involved with helping professions, especially new scientific or technological professions, develop ethics programs—for undergraduates, graduates, and practitioners. By “ethics program”, we mean any strategy for teaching ethics, including developing materials. Our purpose here is to generalize from that experience to identify the chief elements needed to get an ethics program started in a new profession. We are focusing on new professions for two reasons. First, all the older professions, both in the US and in most other countries, now have ethics programs of some sort. They do not need our advice to get started. Second, new professions face special problems just because they are new—everything from deciding who belongs to the profession to formalizing ethical standards so that they can be taught. Our purpose in this paper is to generalize from our experience and to identify some of the fundamentals for getting an ethics program started in a new profession. We present our recommendations in the form of response to 6 questions anyone designing an ethics program for a new profession should ask. We realize that our brief discussion does not provide a complete treatment of the subject. Our purpose has been to point in the right direction those considering an ethics program for new profession