SpeedLab portfolios gain on GBP Flash Crash

The GBP Flash crash sends markets plunging overnight on October 6. SpeedLab’s shock-resistant Robos, however, were able to absorb the crash and generate profits!

While the British pound lost up to 6% against the dollar within seconds over night for no fundamental reason, SpeedLab’s systems reacted instantly generating a positive portfolio returns of up to +1% that day.

“It is the second flash crash in two years,” says SpeedLab CIO Ioannis Poimenidis.  “Most Quants struggle now to recover from losses while SpeedLab took the hit with a profit. SpeedLab’s digital investment strategies perform in such unpredictable und extremely fast markets.  It takes a smart, reliable system like that of SpeedLab that masters precisely such scenarios.”, the expert adds.

What had happened? Experts wonder what cause of events may have caused such rapid decline that sent the British pound to 0,9365 against the EUR. A one-year record of absence of volatilities in world markets suggests that a strong backlash was inevitable. Since transaction volumes with nearly 4,000 futures contracts were at a very high level during the sale, the downturn may have been a sales spike at the end of a downward movement for those who wanted to clean out.  Also the crash has affected not only the FX range, but also the bond market. Margin calls especially in the U.S. Bonds had an extremely contagious virus effect.

Experts suggest that the massive sale was triggered by the US Fed’s monetary policy. Recent news of increasing Fed insiders advocating for a rate hike. Along with weak US economic data released market, markets increasingly doubt central banks have the situation under control.

Posted by SpeedLab AG / Posted on 06 Oct
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