The Brexit market liquidity migraine - one-way traffic & illiquidity already evident

21 June 2016, 05:19
Sherif Hasan

Here's a piece from Reuters on liquidity considerations as we head into June 23

It's a good background read on structural developments in markets:
  •  ...  prices, especially exchange rates, suddenly taking off in one direction or the other ... Machine-led algorithms tend to jump on the bandwagon when they detect signs that assets might break out of ranges
  • Post-2008 decline of proprietary dealing means there are fewer humans to stand in their way Banks have scaled back risk limits, partly due to post-crisis regulation
  • Kill switches on banks' electronic trading platforms are triggered far more quickly when there's too much one-way traffic, which can lead to "air pockets", where prices lurch around a lot

There was a price here a second ago!

More at the article here

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