back to article Robots blamed for wiping 10 per cent off the value of sterling

Algorithms have been blamed for a flash crash that wiped nearly 10 per cent off the value of sterling on Friday morning. The pound slumped to $1.18 as Asian markets opened from $1.26 the day before, falling briefly to $1.14 – a fresh, threedecade low. The fall came after French president Francois Hollande demanded a tough …

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  1. Your alien overlord - fear me

    "amid fears that the UK might actually leave the EU after all" - er, don't they know?

    1. James 51

      I think they meant leave the EEA as well as the EU with WTO defaults in place.

      1. Charlie Clark Silver badge

        WTO defaults in place

        Only if the UK is a member of the WTO. Once it leaves the EU it will have to apply to join the WTO…

        The Tory party conference has given the currency markets plenty to worry about: the government is no longer aiming to reduce debt; access to the single market does not seem to be a priority; the Bank of England may have to choose between propping up assets and defending the currency.

        1. Anonymous Coward
          Anonymous Coward

          "Once it leaves the EU it will have to apply to join the WTO…"

          Wrong. The UK is already a member of the WTO independent of the EU as are all EU member states. The EU is a WTO member in its own right.

          1. Charlie Clark Silver badge

            The UK is already a member of the WTO independent of the EU

            When did it manage that feat? It's been a member of the customs union longer than the WTO has been around.

            Anyway, let's just wait and see what the fools at Westminster come up with the closer they get to reality.

            1. Anonymous Coward
              Anonymous Coward

              "When did it manage that feat? "

              For you and the 3 idiots who are apparently unable to use a search engine and modded me down I refer you to the WTO itself:

              https://www.wto.org/english/thewto_e/countries_e/united_kingdom_e.htm

              1. Anonymous Coward
                Anonymous Coward

                you keep missing sarcasm...

              2. Anonymous Coward
                Anonymous Coward

                @boltar - par for the course around here of late, I'm afraid. Even including a link to information backing your argument doesn't always do much good. Most of the knee-jerk, fact-averse downvoting seems to happen early on after an article is posted, and then later on, more considered Reg readers (presumably those with worthwhile jobs, who can't spend all day troll-modding on forums) generally come along and balance the scales a bit, if you're lucky.

                1. Kubla Cant Silver badge

                  Most of the knee-jerk, fact-averse downvoting seems to happen early on

                  It's a downvote flash crash caused by algorithmic forum reading systems.

            2. Dan 55 Silver badge

              The UK was a founder member of GATT. GATT members got migrated to the WTO.

            3. OwenMc64

              Now, while I don't believe everything I read in the Economist any more than I do all that I read in the Register, quoting the relevant paragraph from:

              http://www.economist.com/news/leaders/21708257-britains-prime-minister-must-resist-her-partys-dangerous-instincts-road-brexit

              "Amid the world’s most complex divorce, Britain’s diplomats also have another vital task. Through its membership of the EU, Britain is a member of the World Trade Organisation (WTO) and party to free-trade deals with 53 other countries. When it leaves, it will lose all that. So Britain must urgently prepare to rejoin the WTO as an individual country—which, again, requires the consent of every other member."

          2. nsld

            @Boltar

            The UK has a partial membership of the WTO with much of its common agreements dependent on membership of the EU.

            This gives a good overview from some legal experts in the field of the challenge the UK faces in re establishing full membership of the WTO if we do leave the EU/EEA/EFTA

            https://www.monckton.com/brexit-mean-uk-wto/

          3. Anonymous Coward
            Anonymous Coward

            wto

            A friend who is a civil servant (hence my AC status) and working on the implications of brexit told me yesterday that is seems we will need to reapply to join the WTO and any member could potentially veto us.

            1. Anonymous Coward
              Anonymous Coward

              Re: wto

              > that is seems we will need to reapply to join the WTO and any member could potentially veto us.

              Not true. They've explicitly said we can't 'cut & paste' EU agreements since we lack the infrastructure which manage them - so the process of creating new (statutory) UK trade bodies and agreements will effectively begin from scratch - and take many years in some cases. Nonetheless our continued and full/discrete membership is already agreed.

              "Britain is a member of the WTO and will continue to be a member of the WTO. But it will be a member with no country-specific commitments. We have had no other situation like that" (Azevêdo - WTO Head speaking in June)

              The brexit posse had zero understanding of this - for large companies the solution is simply to maintain (or build) an EU presence - for others EU shells and partner agreements will probably be the answer short-term. UK Gov currently has no idea what it will do - they're still at scoping stage and not sufficiently skilled or staffed.

      2. Anonymous Coward
        Anonymous Coward

        Hard Brexit is the only option

        With both France and Germany signaling that the UK will not be allowed free access to the single market, this idea that the UK can somehow negotiate a one sided Brexit that allows them to preserve the advantages of the EU while dispensing with stuff they don't want has to be considered DOA.

        I think May will chicken out due to EU countries' quite reasonable refusal to pre-negotiate terms of Brexit before notice is given. Who wants to go down in history as the PM that put the UK on an irrevocable path to national irrelevance on the world stage?

        1. imanidiot Silver badge

          Re: Hard Brexit is the only option

          @DougS, I'm pretty sure the UK was already well on it's way before the Brexit referendum.

  2. Anonymous Coward
    Anonymous Coward

    Fortunately these asinine automated trading crashes tend to get corrected pretty quickly, so the exchange rate's currently back at around 1.24. How we've let real world assets like currencies, stocks and shares be used as nothing more than casino chips in a massive gambling operation is somewhat mystifying.

    1. Charlie Clark Silver badge

      Because the markets make money on trading volumes they push for ways to do more of this and faster and lobby strongly against anything such a transaction tax that could slow it down or reduce their margins.

    2. Bronek Kozicki

      Before this "flash crash", GBP/USD was at 1.26, now it is just above 1.23. This is huge difference, nowhere close to recovery.

      1. Wensleydale Cheese

        Seeing similar with GBP/CHF at 1.21 (11am UK time). I'm sure it was above 1.25 yesterday.

      2. Anonymous Coward
        Anonymous Coward

        Shhh.

        Stop breaking peoples gamblers fallacy oblivion.

    3. Mage Silver badge
      Alert

      crashes tend to get corrected pretty quickly,

      Except in this case it's more like a dead cat bounce.

      Sterling, on average, is going to continue to fall.

      The FTSE 100 is mostly international megacorps, so now that it's clearer what May will do, it is logically rising, nothing much to do with export of UK services and manufactured products.

      There is a short window for people to buy Sterling priced products and then there will be inflation on price of UK exports or web retail sales.

  3. Roger Kynaston Silver badge
    Pint

    but but but

    We have got our country back!

    <snigger>

    Beer because we will need lots of it (real ale only of course)

    1. Charlie Clark Silver badge

      Re: but but but

      real ale only of course

      I don't think they drink much of that in Essex… hm. maybe the country could do with a rebranding "The Disunited Kingdom of Essex, Jockland and Taffyville"? Motto: "Did you spill my pint?"

    2. Paul Shirley

      Re: We have got our country back!

      ...who cares if there's just a little less of it in british hands every time the £ drops and foreigners go on a stock buying frenzy...

      1. Alan Brown Silver badge

        Re: We have got our country back!

        "every time the £ drops and foreigners go on a stock buying frenzy..."

        At some point someone will buy up Sunderland and revive the tradition of land clearance.

        1. tony2heads

          @Alan Brown

          Lands clearance suggests that you have an alternative use for it (in the clearances in Scotland it was sheep).

          What could one use Sunderland for? Wind farms?

          1. imanidiot Silver badge

            Re: @Alan Brown

            Westminster is better suited for power generation. So much hot air being generated there you could probably power the better part of the western world from it.

          2. Paul Shirley

            Re: @Alan Brown

            What could one use Sunderland for? Wind farms?

            That would just undermine efforts to send the Welsh back down the mines on workfare ;)

  4. Anonymous Coward
    Anonymous Coward

    Reports are divided on the exact cause of the system meltdown

    I read it in the beeb in the morning, and it kind of scared me, that in a human-designed, and supposedly human-controlled (?) system, nobody has a f... clue WHY some serious fluctuation happened. So is there ANY human who's in control, or at least, can PRECISELY establish the reasons? Hello, anyone there?

    I'm awaiting the day when the gov decisions get outsourced to software, cause, you know, the machines can think so much faster... Hopefully they can think faster than the machines in Russia or China, when it comes to pressing the buttons to launch our (faster?) missiles... That'll give me an edge, extra 2 seconds to reflect...

    1. Anonymous Coward
      Anonymous Coward

      Re: Reports are divided on the exact cause of the system meltdown

      The point in Automated Trading is to *NOT* have human intervention !!!

      Humans are slow, make mistakes and let emotion get in the way !!!

      The ultimate aim is to develop an algorithm (or set of) that is faster than anyone else and less likely to make mistakes than anyone else.

      These 'Micro crashes' are just teething problems on the way to 'Trading Nirvarna' :) :(

      As long as it does not get in the way of earning your bonuses, no-one in the industry cares.

      The people that make the real money are slightly inconvenienced and the 'Mug Punters' pay for it.

      It is of little note that the knock on effect is felt by the whole country and wider.

      If things get too bad you can always take your 'Trading expertise' to some other foreign climes !!!!

  5. Hans 1
    Happy

    >The fall came after French president Francois Hollande demanded a tough stance be taken by the EU during Brexit negotiations amid fears that the UK might actually leave the EU after all – a so-called “hard Brexit”.

    FFS, the first time I support one of his demands, seriously, I live in the country presided by this Camembert cheese excuse for human being.

    I guess, he was listening to Renaud Miss Maggie, I prefer Vega: You will never be my Maggy May.

    As for the citizens of Britain, good luck, it pans out as I predicted and you are entering one kind of a shit-hole and that for the next 20 years ... take a deep breath now, you'll need it soon ;-)

    Brexiters: Rira bien qui rira le dernier! Großbritannien ? Griff ranschweißen und wegschmeißen!

  6. Whitter
    Boffin

    High frequency trading

    High frequency trading: what true value does it bring as opposed to paper-only gains?

    An impossibility I'm sure, but I'm sure that slowing down trading stocks/shares rather than speeding them up might bring the useful pressure to "know what the hell you are buying/selling".

    1. Richard 12 Silver badge

      Re: High frequency trading

      Arbitrage basically.

      It closes down the magic money tree circles where you can buy from X and instantly sell to Y at a profit.

      1. kmac499

        Re: High frequency trading

        Buy from X and sell to Y in the nanoseconds before Y realises what you paid for it and you get your 1/1000% profit. Which means in order to make it worthwhile getting out of bed for, you have to sell gazillions to make a few measly million..

        I'm all for people buying and selling stuff to each other but if there was ever a case for the Tobin Tax High frequency trading is it. Can I suggest as a possible twist the rate of tax is inversely proportional to the length of time you hold the assets. so the longer you hold'em the less tax you pay.

  7. David Pollard

    Who was buying?

    Someone made a packet.

  8. amanfromMars 1 Silver badge

    NEUKlearer HyperRadioProActive IT ..... is not a Trifle

    Blame who or whatever you will, but it is surely cold comfort whenever it is neither a mistake nor accident in a greater master plan with remote controlled command operations .... with unfolding series of Immaculately Machined and Advanced IntelAIgently Designed proactions ......... http://www.ur2die4.com/161007-2/

    And Perfect AI Stealth is delivered in it being generally and widely believed and perceived as practically impossible.

  9. Anonymous Coward
    Anonymous Coward

    Don't you just love how economists present their profession as an exact science.

    A butterfly's wings.

  10. Alan Brown Silver badge

    "The Tory party conference has given the currency markets plenty to worry about: "

    Exactly that, and currencies are only worth what the market confidence in them is. It didn't matter that the new Roman coins had more silver in them around 440AD than previous issues. People took one look at them, then at the old ones and within 18 months roman currency was valueless as no-one would accept it.

    Flash crashes happen because people game algorithms to try and gain an advantage (the algorithms are in turn setup by people who might be good at statistical analysis, but they don't know all the inputs, and the people using the algorithms know just enough about them to clock-n'drool), OR because something is genuinely overvalued and once the bubble starts to burst the automated activity rapidly drives the trade values back down to "actual" levels.

    After WW2, "British made" became a codeword for "shonky designs-by-committee using the cheapest possible supplies regardless of quality and put together by badly treated workforces using century old production tools" (literally that old in many cases) - the epitome of this being British Leyland. That's why people of the "empire" stopped 'buying british' unless forced to by their governments. Even though the quality has changed, memories are very long - as GM found when it tried to resurrect the Vauxhall brand in Australia/New Zealand.

    The only thing that's been keeping the value of the pound high over the last 4 decades is the financial services industry. When that industry lost confidence in its home base - it has, and all the orgs are already moving their bases out of the UK - the pound lost a vital support base. Its remaining value comes from exports by its manufacturers - who mostly happen to be the car industry and also spooked into moving out. Commissar May could stand up tomorrow and say that Brexit is cancelled but it's already too late.

    But never mind. At least we got that £350million to spend on the NHS, didn't we?

  11. Stern Fenster

    I understand why, for practical reasons, we have to pay attention to the value of sterling. I understand that certain people will be attracted to all that money that is available through currency speculation. What I don't understand is why we should take these pathetic little brain-dead gamblers as an indicator of anything at all about the state of the world beyond their own self-entitled fantasy bubble.

    1. Hans 1
      Facepalm

      >What I don't understand is why we should take these pathetic little brain-dead gamblers as an indicator of anything

      Is the UK self-sufficient ?

      Import prices go up when pound tanks ... and it has not finished tanking, believe me! Soon, when you will want to buy, say, a MilyWay, it will be a tenner ... your salary will not increase, of course ... you will then think "Ohhhh, lets produce and export goods then, we are competitive" ... and somebody smart will ask: "Where are your factories?" and you will answer, "Oh, we trashed them in the 70's and 80's, but it's OK, because we compensate with the financial sector!" to which the smart guy will reply "Which financial sector? We just annihilated that one with Brexit!".

      DISCLAIMER: I do not care either way (in terms of Brexit), I just think it is hilarious how you guyz have STILL not realized that you are in deep shit ... I live abroad and all this does not affect me, I DON'T CARE!

      1. Hans 1
        Happy

        Looking forward to buying my MayFair flat for peanuts, thanks folks!

        1. Richard 12 Silver badge

          You won't be able to afford the peanuts

          Peanuts are imported...

          1. lukewarmdog

            Re: You won't be able to afford the peanuts

            I stockpiled some value peanuts from Tesco earlier in the month.

            Now my choices are to eat them as a high protein snack or to keep hold of them against the day that London property that I want becomes available.

            Or the apes rise up. Damn these difficult decisions.

            *munches peanuts to alleviate stress*

            *goes to Tesco to buy more peanuts*

            1. Duffy Moon

              Re: You won't be able to afford the peanuts

              I thought you were about to say that you were going to hitch a lift with some passing Vogons.

          2. Hans 1
            Coffee/keyboard

            Re: You won't be able to afford the peanuts

            >Peanuts are imported...

            I l i v e a b r o a d !

            Upvoted!

      2. Aitor 1 Silver badge

        Well, it does affect ME. And I could no vote (bloody foreigner that mantains NEDs, politicians and private monopolies).

        I cannot describe properly how pissed I am at the situation, BREXIT has cost me more than 30.000£ to date, and counting. On top of that, I have to endure xenphobia. At least I am white, blonde and green eyed..

        1. Anonymous Coward
          Anonymous Coward

          @Aitor 1

          I'd quite happily give you the thirty quid and let you sod off to where you came from.

          Or do you mean £30,000? In which case you might want to lean how to write to write numbers in English.

          1. Hans 1

            Re: @Aitor 1

            >Or do you mean £30,000? In which case you might want to lean how to write to write numbers in English.

            Ever heard of "locales" ?

            You are, what is commonly known as, a TOTAL CUNT! See that window, there, Yes, that one, open it and jump, please, thanks, you are now a hero ... while you are falling!

          2. Dan 55 Silver badge

            Re: @Aitor 1

            I do apologise for the AC, he's a bit of a twat. He probably typed that by accident while chewing the keyboard anyway.

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