The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Front running? It’s all in the Fix

Talking of volatility, there was a huge turnaround in the GBP and AUD during my brief break for lunch yesterday. I can’t remember the last time I saw cable gap like this but even I recognised that the initial reason suggested for the move was complete rubbish.

The fall of sterling was attributed to rumours of the resignation of British Prime Minister Gordon Brown. Surely, I thought, if the one-eyed Scottish idiot, as one local TV presenter harshly described him, had gone, then sterling would have gone bid. A similar thing happened back in prehistory when Margaret Thatcher resigned. As we all know, change can breed optimism.


But the truth was more prosaic. It seems that the moves were a result of a breakdown in the proposed alliance between Rio Tinto and Chinalco. This resulted in the hedge being unwound in the London Fix at 1pm yesterday.


Funnily enough, only this week I was asked if front running occurred in FX, a subject I’ve written about before. I know what the official answer is, but every picture paints a thousand words. In a rare mood of altruism, I’ll avoid charging my esteemed editor for around 900 of them and avoid naming the bank that did the order. Instead, just look at the graph.



 
Source: Thomson Reuters



See previous coverage:







You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree