Foreign exchange switch to machine-trading = flash crashes

30 May, 2019

Screenshot 2019-05-30 at 9.06.10 AM

Sudden, violent and often quickly reversed price moves are now a regular occurrence in world currency markets — often during the so-called ‘witching hour’, a period of thin trading between 5-6 pm in New York when currency dealers there have powered off and colleagues in Tokyo have yet to sign on. Bankers and policymakers agree that an industry-wide switch to machine-trading in FX markets is behind the frequency and severity of the price moves, meaning that further crashes are likely.

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