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Pound Is the Latest Flash Crash That Traders Won’t Easily Forget

  • Algorithmic trading seen exacerbating pound’s extreme drop
  • Stock, futures and Treasury markets have all suffered
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Foley: Clear That Sterling Is a 'Vulnerable Currency'

Traders watching the pound’s 6.1 percent plunge against the dollar in minutes on Friday morning in Asia could be excused for feeling disbelief -- and perhaps some deja vu.

A decline in currency transactions is making moments of extreme volatility more common as participants find it harder to enter or exit positions without affecting prices. And as computers take over the market, algorithmic traders who some say exacerbate swings have more than tripled foreign-exchange volumes over the last three years, according to Aite Group.