Day: March 14, 2019

Flash Crash or the New Norm? Deciphering January 3

The foreign exchange industry got an early reminder of risk when on the second full day of trading this year the market saw another flash event. What, if anything, does this mean for FX market liquidity and volatility in the year ahead though? Colin Lambert finds out.The very sharp moves seen in FX markets at the start of the year triggered yet another round of introspection over conditions in the FX market with commentators pointing the finger of blame at one or more of algos, news from Apple, thin markets, Japanese retail and poor execution. Although Profit & Loss understands that industry players have been approached for data logs by certain regulators, the chances of an investigation turning up a convincing catalyst for the moves are thin.

And Another Thing…

This column comes with a warning as I am getting increasingly grumpy with attitudes to FX market price action. You clearly can’t please everyone, but how can someone complain – as they did to me this week – that what we have seen in sterling this week was “the wrong kind of volatility”? Luckily I have this column to let off steam so let’s do that – with a take down of the model that has turned FX traders into glorified brokers.

Basel Committee Highlights Crypto Concerns

The Basel Committee, established under the auspices of the Bank for International Settlements, has issued a statement highlighting its concerns that “the continued growth of crypto-asset trading platforms and new financial products related to crypto-assets has the potential to raise financial stability concerns and increase risks faced by banks.”
The Committee, which reports to the Group of Central Bank Governors and Heads of Supervision, acknowledges that the crypto-asset market remains “small” and that banks have “limited direct exposures”, however it argues that such assets do not “reliably provide the standard functions of money and are unsafe to rely on as a medium of exchange or store of value”.

Flash Crash or the New Norm? Deciphering January 3

The foreign exchange industry got an early reminder of risk when on the second full day of trading this year the market saw another flash event. What, if anything, does this mean for FX market liquidity and volatility in the year ahead though? Colin Lambert finds out.The very sharp moves seen in FX markets at the start of the year triggered yet another round of introspection over conditions in the FX market with commentators pointing the finger of blame at one or more of algos, news from Apple, thin markets, Japanese retail and poor execution. Although Profit & Loss understands that industry players have been approached for data logs by certain regulators, the chances of an investigation turning up a convincing catalyst for the moves are thin.