Stephonomics: AUD Insider Trading, or Just Plain Trading?
- With 30 years of industry experience, Stephen A. Simonis presents his view about current events and their past parallels. Read and learn what he has to say about the AUD, scapegoats and Zuccotti Park.
ABOUT THE AUTHOR: Stephen A. Simonis Sr. is a foreign exchange Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term executive with over 30 years experience in the FX market. Mr. Simonis last served as managing director of the FX Global Markets at BNY Mellon, where he demonstrated expertise in an environment characterized by high volumes, rapid technological and regulatory evolution, sophisticated competitors and demanding clients. In his tenure at BNY Mellon, he initialized and developed the trading and risk management links amongst Tokyo, Hong Kong, Brussels, London and New York trading floors; successfully managed market, credit and client risk through a variety of geopolitical and financial crises; and held a key role in the development and implementation of Online Trading Online Trading Online trading represents the trading of fiat currencies, digital currencies, commodities, stocks and indices, where traders and investors intend to make a profit, via the purchase or sale of the aforementioned products. This is done through an electronic network, made accessible by brokers in the form of an online trading platform or hub.Online trading continues to see a rapid growth year on year, due to a number of reasons. Firstly, the number of brokers offering their services, with more mone Online trading represents the trading of fiat currencies, digital currencies, commodities, stocks and indices, where traders and investors intend to make a profit, via the purchase or sale of the aforementioned products. This is done through an electronic network, made accessible by brokers in the form of an online trading platform or hub.Online trading continues to see a rapid growth year on year, due to a number of reasons. Firstly, the number of brokers offering their services, with more mone Read this Term systems.
(Photo: Bloomberg)
The move in the AUD before refraining from cutting interest rates on March 3rd, 2015 has sparked some people to consider foul play. Some are insinuating the use of insider information, an early release and other variants of unjust behavior. Some context for those unaligned with what I'm referring to: on March 3, 2015, just before the RBA was about to announce its interest rate decisions, the AUD/USD went from 77.74 to 78.22. ...that's it.
Have we officially gotten to a place where a 50 point move, at a particularly critical time I might add, becomes suspect of wrongdoing? Let's pump the brakes on the regulatory freight train before we start launching probes, investigations, witch hunts, and whatever other ironic criminal behavior these self-governing watchdogs bestow upon their prey.
Is it possible that someone decided to cut a large short AUD position right before the release in a particularly thin market at the time? Yes. Could a company decide to speculate on the release with no particular inside knowledge? Obviously. Is it possible someone executed the dreaded 'fat finger' trade? Bid too high and pushed the market higher in a illiquid market? Of course.
I sympathize with anyone who was stopped out by an auto trading system at a particular vulnerable time--but it is the risks of foreign exchange and not necessarily cause for suspicion. If you were long AUD at that time you are less inclined to start looking for a scapegoat and "reasons" why it moved 50 pips in your favor. (We haven't touched on the fact that a 50 point is not exactly an earth shattering move - ask someone involved in the Swiss franc or any other moment of decent volatility in the market). You can read more about it in my last article. However, when traders are short and this move happens, we see tents being pitched at Zuccotti Park launching Occupy Wall Street part II.
Sometimes you are short and it goes higher --that's why they call it risk.
This article is part of the Forex Magnates Community project. If you wish to become a guest contributor, please apply here: UGC Form.
ABOUT THE AUTHOR: Stephen A. Simonis Sr. is a foreign exchange Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term executive with over 30 years experience in the FX market. Mr. Simonis last served as managing director of the FX Global Markets at BNY Mellon, where he demonstrated expertise in an environment characterized by high volumes, rapid technological and regulatory evolution, sophisticated competitors and demanding clients. In his tenure at BNY Mellon, he initialized and developed the trading and risk management links amongst Tokyo, Hong Kong, Brussels, London and New York trading floors; successfully managed market, credit and client risk through a variety of geopolitical and financial crises; and held a key role in the development and implementation of Online Trading Online Trading Online trading represents the trading of fiat currencies, digital currencies, commodities, stocks and indices, where traders and investors intend to make a profit, via the purchase or sale of the aforementioned products. This is done through an electronic network, made accessible by brokers in the form of an online trading platform or hub.Online trading continues to see a rapid growth year on year, due to a number of reasons. Firstly, the number of brokers offering their services, with more mone Online trading represents the trading of fiat currencies, digital currencies, commodities, stocks and indices, where traders and investors intend to make a profit, via the purchase or sale of the aforementioned products. This is done through an electronic network, made accessible by brokers in the form of an online trading platform or hub.Online trading continues to see a rapid growth year on year, due to a number of reasons. Firstly, the number of brokers offering their services, with more mone Read this Term systems.
(Photo: Bloomberg)
The move in the AUD before refraining from cutting interest rates on March 3rd, 2015 has sparked some people to consider foul play. Some are insinuating the use of insider information, an early release and other variants of unjust behavior. Some context for those unaligned with what I'm referring to: on March 3, 2015, just before the RBA was about to announce its interest rate decisions, the AUD/USD went from 77.74 to 78.22. ...that's it.
Have we officially gotten to a place where a 50 point move, at a particularly critical time I might add, becomes suspect of wrongdoing? Let's pump the brakes on the regulatory freight train before we start launching probes, investigations, witch hunts, and whatever other ironic criminal behavior these self-governing watchdogs bestow upon their prey.
Is it possible that someone decided to cut a large short AUD position right before the release in a particularly thin market at the time? Yes. Could a company decide to speculate on the release with no particular inside knowledge? Obviously. Is it possible someone executed the dreaded 'fat finger' trade? Bid too high and pushed the market higher in a illiquid market? Of course.
I sympathize with anyone who was stopped out by an auto trading system at a particular vulnerable time--but it is the risks of foreign exchange and not necessarily cause for suspicion. If you were long AUD at that time you are less inclined to start looking for a scapegoat and "reasons" why it moved 50 pips in your favor. (We haven't touched on the fact that a 50 point is not exactly an earth shattering move - ask someone involved in the Swiss franc or any other moment of decent volatility in the market). You can read more about it in my last article. However, when traders are short and this move happens, we see tents being pitched at Zuccotti Park launching Occupy Wall Street part II.
Sometimes you are short and it goes higher --that's why they call it risk.
This article is part of the Forex Magnates Community project. If you wish to become a guest contributor, please apply here: UGC Form.