Fed official warns ‘flash crash’ could be repeated

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A senior Federal Reserve official has warned that last autumn’s “flash crash” in US Treasurys could happen again due to the changing nature of the US government debt market, and urged banks, investors and exchanges to adopt a revised set of guidelines in response to the turmoil.

However, Simon Potter, executive vice-president of the Federal Reserve Bank of New York, warned in a speech on Monday that the unintended consequences of regulatory and market changes could mean that “that sharp intraday price moves become more common” in the future. Continue reading