Tag: Flash Crash

Flash Crash

The 20 for 20 Countdown – Part Three

It’s been a busy 20 years since Profit & Loss launched. Colin Lambert and Galen Stops have picked out 20 key events or trends during that time and asked senior industry figures for their perspective on them – here’s numbers 10-6. 10. Brexit Putting aside the (ongoing) politics, the night of the Brexit vote showed […]

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.

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.

The Profit & Loss Crystal Ball

Once again, it’s that time of year when our editorial staff dust off the infamous Profit & Loss crystal ball in order to take a peek into the future and tell our readers what they should expect from the year ahead. Colin Lambert’s “Trade of the Year” makes a welcome return, and he’s back with a bang as he focuses on the drivers of the ever-popular NOK/MXN pair. As has become custom, Lambert is also predicting consolidation within the FX industry, but regular readers might just be surprised to find out that for once he doesn’t think that the M&A activity will be on the platform side this year.

RBA Report Casts the Net Wide in Seeking Flash Crash Answers

A report in the Reserve Bank of Australia’s Statement on Monetary Policy looks at the flash event in FX markets on January 3 when the yen appreciated some 3% in a matter of seconds before falling back, but fails to discern a single factor behind the move.
Citing the fragmentation of the FX markets across an increasing number of different platforms, the RBA says “it is difficult to draw firm conclusions on the cause of the flash event”, adding that three factors are likely to have contributed to what it terms the “brief deterioration in market conditions”.

In the FICC of It

Scepticism abounds in this week’s In the FICC of It podcast as Colin Lambert and Galen Stops take a look at the latest bank to unveil a digital markets strategy – including all your favourite buzzwords. While Stops believes this is the latest move in what will be a growing trend, our podcasters also wonder whether it’s not really just a rebranding exercise?
They then move into more traditional areas and discuss JP Morgan’s survey on FX market conditions, and while they agree with a lot of the findings, there are one or two areas that raise an eyebrow, not least around internalisation and AI.
AI-generated trading and liquidity are also the forefront as they move on to share their thoughts around the flash crash in Jardine Matheson stock last week in Singapore, including asking the question, what does it mean for market maker programmes and certain order types?
The discussion then moves on to look at the latest FX turnover surveys from the world’s FX committees, with particular attention on three interesting/puzzling (delete as appropriate) elements of the UK report surrounding RMB, NDFs and voice brokers.
The podcast ends on with Lambert praising “the optimism of youth” after Stops highlights what he thinks could be a very important line at the end of the latest document detailing an FX-related fine in the US – in other words, the cynic in him won the day!

And Another Thing…

There is nothing like a flash event to get people excited and for news outlets to dust off and update the old “blame the algos” stories for publication. Equally, there are members of our industry of a (ahem) certain generation who are quick to jump on the bandwagon with the rejoinder “it wasn’t like that before the machines”.
As a member of that “certain” generation I can assure readers that it is utter nonsense and that last week’s flash event was triggered by a human.

In the FICC of it

In this week’s podcast Colin Lambert and Galen Stops tackle two big stories in the FX market: the recent flash crash in the Asia markets and the changes at Citi’s FX prime brokerage (FXPB) business.Both Lambert and Stops express skepticism that the news regarding Apple’s profits in China was the cause of the flash crash, although the former is equally unsure about an alternative theory put forward by the latter to explain the price moves. Both agree though that the event was symptomatic of changes in the nature of liquidity in the FX market, and note a disparity between what many market participants will say in private and in public on this matter.

In the FICC of It

In this week’s In the FICC of It podcast, P&L’s editor Galen Stops tries to rein in a punchy managing editor Colin Lambert. So to find out what is a “social experiment” and what report “is a propaganda exercise” listen in. Along the way there will be more considered opinion and insight on the changing dynamic of the LP-client relationship, including a quick way to identify changing LP behaviour, as well as a look at what is, at face value, a surprising deal involving FXall and 360T.

FCA Paper Claims to Throw New Light on Sterling Flash Crash

A new paper published by the UK’s Financial Conduct Authority (FCA) claims to throw new light on events surrounding the sterling flash crash of October 2016 by being the first paper to use trade reports to the FCA under EMIR to analyse how different market participants react in times of market stress and their impact on the liquidity dry-up in a flash crash.
The paper has, however, triggered some confusion amongst market participants thanks to ambiguous terminology, mainly the constant reference to “OTC derivatives”, without specifying exactly what products it is talking about.