Robots blamed for sterling flash crash

Robots blamed for sterling flash crash

Robot traders are being blamed for a currency rout which saw the pound plunge by six percent in just two minutes in early Asian trading Friday.

At one point the pound hit a 31-year record low of $1.1841, before recovering to $1.24.

The speculation is hitting confidence in sterling, which is now seen as a marked target in the wake of hardline comments from the Conservative Party conference on Britain's exit from the European Union.

One theory for sterling's sudden plunge during a thin market for trading is that an algorithm set to scan the news for negative Brexit stories went into overdrive, pushing other computerised trading systems to pile into the market. Others surmise a fat finger trade woke up the market's computer-driven traders and spurred them into a selling frenzy.

The mini-flash crash will turn attention once again to the role of algorithms in exacerbating currency market volatility, an issue which has been long-debated in the equity markets without yet reaching a satisfactory resolution

Comments: (0)

Trending