Third, as in previous flash events, algorithmic trading strategies may have amplified the move, for example, by adding to demand to buy the yen as it appreciated. It is also difficult to be definitive about what restored orderly market functioning.
Market contacts suggest that discretionary buying of Australian dollars by traditional market-making banks and institutional accounts helped to stabilise conditions and re-establish the process of price discovery. Ultimately, this event did not lead to wider disruption. But the growing list of such disorderly moves in key financial markets in recent years clearly bears close watching.