This morning’s flash crash in Cable in which it dropped 9.5% in seconds and the low of which is still disputed raise some interesting questions for the creators of the FX Code of Conduct.
Several sources say that the mayhem was triggered by one account executing a large trade into the market, possibly for GBP 200 million. This was enough to send the market into freefall as liquidity during the already thin early Asian session, thinned out further.
If the order was executed by one account, or even by several accounts on behalf of one customer, questions have to be asked about why they did it then, and how they executed.
The opening panel discussion of this year’s Profit & Loss Forex Network Chicago conference featured an unusually frank and honest discussion about the challenges associated with implementing the FX Global Code of Conduct.
I t has been well documented that buy side firms have been much slower than their sell side counterparts to commit to the Global Code, with one panellist at Profit & Loss Forex Network Chicago highlighting that of the 452 entities that have signed the statement of commitment only 23 were asset managers. Indeed, they noted that of the asset managers that have signed the Code, the majority trade currency as their primary business, or even as their sole focus.