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On October 7, Cable flash crashed in early Asian trading, leading to chaos in the market and an official investigation into events surrounding the move. Colin Lambert takes a look at what happened.
A few minutes into October 7 UK time, at 12.07.03am to where there are grounds to believe that the transaction is be precise, Cable traded through 1.2600 having fallen 30 points in the previous minute. Just 23 seconds later it traded below 1.2200 and 45 seconds later it had traded at 1.1378 on one platform.
Just two minutes later the market was trading back above 1.2100 and just 10 minutes after the initial move, Cable was trading above 1.2400. The market had “flash crashed”.
So the latest Bank for International Settlements (BIS) Triennial Central Bank Survey is out and, as Profit & Loss previously reported, the headline figure is that the FX market has contracted in size from $5.3 trillion to $5.1 trillion traded per day over the past three years.
This news seems to have caught very few people by surprise, however the survey shows spot foreign exchange volumes are lower while FX swaps activity has grown considerably, especially in Asian centres and in the yen.
The illiquidity in the market following the
Swiss National Bank’s (SNB) decision to drop its peg to the euro raised
numerous questions about how liquidity functions in the modern FX market, and
particularly how it functions in times of ...
The big news this week was the announcement by the
International Monetary Fund (IMF) that the Chinese renminbi will
be included in its Special Drawing Rights (SDR) basket.
But is this decision purely symbolic or does it have broader
implications ...
Goldman Sachs has released the first six of
its ten top trades for 2016, including two FX recommendations, against an
“unusually uncertain” backdrop of Fed rate hikes, ECB easing and volatile oil
and metal prices.
The bank says that while the ...
AUD: The Ghosts of Overshoots Past
The AUD has sailed through levels which would be
considered fair relative to domestic economic
fundamentals and has begun to provide a stimulatory
tailwind to the non-mining economy.
Our analysis suggests that this is ...
By Callum Henderson, FICC Research, Standard Chartered Bank and Eddie Cheung, FICC Research, Standard Chartered Bank (HK) Limited
In the wake of the 11 August ‘adjustment’ to the USD/CNY fixing mechanism, markets have focused on the likelihood of a major ...
The US Federal Reserve
Bank has decided not to raise key interest rates in September, with chairwoman
Janet Yellen citing concerns about a global economic slowdown, low inflation in
the US and volatile stock markets as the reason for this ...
A new report from
academics based in Switzerland argues that FX liquidity often evaporates in
times of market distress, adding to the recent ongoing debate on this issue.
Profit & Loss editor, Colin Lambert, noted in
his recent column that there ...
As many prime brokers continue to withdraw their services from smaller clients, the prime-of-primes are seeing more business come their way. Galen Stops looks at the implications of this trend for the FX market and asks whether it is a ...
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