Offenbar Panik gestern. Barclay's hat den Yen zeitweise sogar aus dem System genommen. Das ist ja besonders vertrauenserweckend.
--Yen surge Wednesday threw dealer banks into "panic mode"
-- Prices swept wider for all banks
-- Barclays Capital pulled yen prices from Barx trading systems, clients unable to trade yen
-- Bank jitters may have contributed to yen's record-breaking jump
LONDON (Dow Jones)--U.K. bank Barclays Capital (BCS, BARC.LN)pulled yen prices off its Barx dealing system for a short period Wednesday, as the Japanese currency fizzed to its strongest levels on record, a person familiar with the situation said Thursday. In a spectacular move, the dollar collapsed against the yen at 2100 GMT Wednesday, sinking 4% to hit a record low of Y76.25.
Most big banks' systems functioned normally during that hectic period, albeit with a markedly wider spread between where the banks were prepared to buy and sell the currency--a feature that reflected extreme market stress and uncertainty. But Barx was unavailable, a Switzerland-based user said.
"All of the banks showed wide spreads--they went into panic mode," the Barx user said, speaking on condition of anonymity.
"But I use six banks, and of them, only Barx was down," he said, adding that he was unable to trade yen on the system for an hour.
A person familiar with the situation said Barx didn't experience any technical difficulties, but the bank's traders decided to pull prices from the system to protect themselves during hectic trading conditions at what is normally a quiet time of day.
Barclays Capital said in a statement: "Due to unprecedented volume in yen based currency pairs, we extended our normal daily reset time period between NY/Asia time zones. Subsequent to this, we maintained superior yen pricing through a period of extremely high volume without interruption."
Barclays Capital is the world's third-biggest currencies-dealing bank, according to benchmark data from financial publishing firm Euromoney. Its Barx system is well respected in the industry and is used heavily, particularly by smaller banks and by hedge funds. Rival Deutsche Bank (DB, DBK.XE)--the world's biggest currencies-dealing bank--said its systems operated normally throughout the period, and that it was trading electronically and by voice throughout the yen's surge.
Citigroup (C)--the world's fourth-largest dealer--said its trading systems operated normally throughout, and it didn't pull its prices off its electronic platforms. The Barx user said all banks pushed out their spreads as the yen shot higher. Banks were showing prices for trades in the dollar against the yen with a spread of some 50 or 100 so-called pips--the tiny increments of currencies prices.
In normal trading, spreads are around 0.8 to one pip wide. These wider spreads, particularly in combination with the Barx outage, "definitely" contributed to the jerky rush higher in the Japanese currency, he said. The yen has been climbing markedly since last week's earthquake and tsunami, in a shift that reflects expectations Japanese investors and companies will bring funds home from abroad. The yen is also considered a safe retreat in times of stress, and has therefore been attracting even greater demand as the country battles radiation leaks at the Fukushima nuclear power station.
The trigger for the rapid ascent late Wednesday is unclear, although anecdotal evidence suggests that retail investors may have been forced out of unsuccessful negative bets on the yen. As they folded on those bets, the currency sprang higher, hitting a series of options and stop-loss orders to fuel a rapid run-up. The absence of Barx and gaping spreads on yen prices could not have helped to keep the market flowing smoothly.
March 17, 2011 14:48 ET (18:48 GMT)
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