7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Annex  Chart 1: GBP/USD exchange rate in 2016  Chart 2: Trading volumes in GBP/USD on 24 June  1.5  and 7 October  1.45  7 Oct flash event  1.4 1.35 1.3  EU Referendum  1.25  0  1.2  1  2  3  4  5  6  7  8  9  10 11 12 13 14 15 16 17 18 19 20 21 22 23  Hours (BST)  Sydney  Intraday low  Tokyo  1.15  London  Jan  Feb Mar Apr May Jun  Jul  Aug Sep Oct Nov Dec  New York  2016 24-Jun  Sources: Bloomberg and Bank calculations  2-6 Oct avg  07-Oct  Sample periods are (BST): a) 24 June 2016 00:00:02 – 21:59:16 b) 2 October 2016 18:51:07 – 6 October 23:56:06 c) 7 October 2016 00:02:10 – 22:01:24. Note: this measure is presented without scale for confidentiality reasons. Sources: Thomson Reuters and Bank calculations.
Market Functioning Speech given by Chris Salmon, Executive Director, Markets, Bank of England  OMFIF City Lecture, London Tuesday 24 January 2017  I am grateful to Charlotte Barton, Nick Butt, Liam Crowley-Reidy, Nick Govier, Tom Horn, Rebecca Jackson, Sarah John and Nick Mclaren for their assistance in preparing this speech. 1  All speeches are available online at www.bankofengland.co.uk/speeches  Introduction  It is a pleasure to be here this evening. The economic and political events of the past twelve months raise many questions. From my vantage point as the head of the Bank of England’s Markets Directorate, they reemphasise the need for central banks to understand the structure and functioning of core financial markets. That matters both for our role as guardians of financial stability, and to ensure the effectiveness of our own operations to implement monetary policy. Let me illustrate this with reference to developments in two very different markets. i)  The first – the sterling FX market – a large, global, highly liquid, and almost continuously traded, market, with a constantly evolving structure. Here, the challenge is to understand how those developments affect the functioning of the market. My focus will be on the lessons about market functioning from two particular episodes last year: the period immediately following the EU referendum and its ‘flash crash’ a few months later. ii)  The second market – the sterling corporate bond market – is small, local, and thinly traded, with heterogeneous underlying assets.