Tailored approach to circuit breakers ‘hampering demand’ for exchange-based FX trading

The lack of a unified approach to circuit breakers in the FX market is said to be reinforcing loyalty to OTC trading and stifling enthusiasm for exchange-based activity, despite the protections such mechanisms can offer.

The FX market has experienced notable periods of stress in recent years, albeit not on the scale of the Swiss National Bank’s decision to abandon its peg to the Swiss franc in 2015.

For example, during the January Yen move, the market traded more than $1 billion in USD/JPY on EBS Market in less than a minute.

However, while Euromoney has previously reported on ambivalence towards circuit breakers as a mechanism for reducing market risk, opinion seems now to have hardened against these ‘collars’.

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