As liquidity has clearly deteriorated in FX markets over the past two weeks, this week’s podcast is faced with a series of questions regarding participant behaviour, and joining Colin Lambert to discuss these issues is John Crouch, founder and CEO of Ideal Prediction. Using the imagination for which he is famous* Lambert kicks things off […]
Does the FX industry want to continue along the road to modernisation, or has it gone far enough? Answering this question is the starting point for the issue I want to discuss, because there is a push out there for same-day and then instantaneous settlement of “spot” FX transactions, but at the moment who would want to be involved in that? All it would take is one slightly contentious move and one large barrier or stop executed and we would be in a pile of trouble.
A story by Bloomberg News has prompted some head-scratching amongst FX dealers after the service reported a flash crash in EUR/USD on Christmas Day, December 25.
The report says that at around 7.30am New York time on the 25th, EUR/USD plunged from 1.1860 to 1.1550 before rebounding to 1.1650 and then recovering all the way back to 1.1850 just a couple of hours later.
The Bloomberg report states, “The sudden plunge could’ve been sparked by computer-driven trading,” however dealers spoken to by Profit & Loss say their records and systems are showing nothing.
Market sources say the low in Cable is being disputed, in spite of what traders say was a clear print at 1.1378 on Thomson Reuters Matching.
A source familiar with the matter says the low trade was a mishit and that the deal is currently being repapered to a new rate.
While several platforms are printing a low between 1.1850 and 1.1950 – something that in itself highlights the level of confusion in the industry, Profit & Loss understands that “at least” 10 trades were executed at 1.1500 on three venues.