Nobody should be surprised to read that the report into the Sterling flash crash of October 7 found it was likely caused by a “confluence of factors” – initial reports in this publication and others covered a wide variety of potential triggers for the event, all of which were credible.
What has surprised me a little, however, is how I find, having read the report several times, I have as many, if not more, questions – perhaps observations is a better word – than I started with.
These questions and observations can be distilled down into four generic themes and a conclusion – Evaluation; the impact of historical events; the necessary responses and lessons; and Asia.
Thursday’s column provided a steady stream of comments and feedback with one question over-riding all others – what can be done to avert more flash events, especially in the Australasian window before the mainland Asia open?
I actually think the question should be, ‘what, if anything, should be done?’ because I remain unconvinced that what happened last week requires a radical rethink of how the FX market operates. This may come as a surprise to long-standing readers who may recall me advocating for the use of central bank volatility bands post-sterling flash crash, but the two events are different.