flash crash in USDCHF
There was a near 200 pip flash crash in USDCHF on Sep.20th 5:30 pm EST. Dow Jones Newswire probe reports:
EBS User Error Causes Slump In Dollar Vs Swiss FrancDate: 09/21/2011 13:46By Alexandra Fletcher
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--An error by a trader using the EBS currencies-dealing system caused an abrupt slide in the dollar against the Swiss franc overnight, EBS owner ICAP PLC (IAP.LN) said Wednesday.
The dollar fell by 2% at around 2100 GMT Tuesday, hitting a low of CHF0.8698 before immediately rebounding. At 1230 GMT Wednesday, the dollar traded at CHF0.8945.
A spokeswoman for EBS said prices in the currency pair "were entered by one counterparty in error," affecting "a very small number of counterparties."
In such circumstances, the two sides of the trade may agree, as they often do, to cancel it. EBS said it has arranged contact between the counterparties, in line with its usual practice.
However cases like these can send ripples to market participants outside of EBS, as the system's benchmark rates are often used as triggers for trades or hedges.
Question is: EBS is going to settle it among themselves as if no such error took place. What about others whose trades were stopped/killed by this flash crash? Will FxOpen reverse all those trades?
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