Each year, the global meeting of foreign exchange committees brings together representatives of foreign exchange committees from 8 major financial centers to discuss issues related to the foreign exchange market. They met in Tokyo on March 23, and overnight posted the Minutes of the meeting.
Here's what they had to say about the Swiss National Bank trashing the market (bolding is mine):
- "Participants discussed the impact of an increased use of electronic trading platforms and High Frequency Trading (HFT) on market liquidity, noting the reaction to the Swiss National Bank (SNB) policy decision on 15 January 2015 as an example.
- They noted that the prevalence of algorithmic and HFT trading on electronic platforms could have contributed to the initial sharp price action in the Swiss franc but also could have enabled the market to stabilize faster than otherwise expected
On FX market liquidity:
- Some suggested that lower liquidity could be partly attributed to new regulations, since the liquidity of the forward market has also deteriorated (where electronic trading is not as prevalent).
- In addition, it was noted that transaction volumes and bid-offer spreads are not always good indicators of the level of market liquidity, and that there are many other metrics to take into account when measuring liquidity
- Participants shared the view that FX market liquidity would warrant continued attention, including the potential impact of regulatory developments and changes in market structure and market participants' behavior."
