Forex market volume jumps 7000% in 1998

Does anybody know what happened in the forex market on April 28, 1998? Forex volume exploded overnight and never looked back. Gramm–Leach–Bliley Act (also known as the Financial Services Modernization Act of 1999) was being worked out by financial institutions at the time so maybe that had something to do with it?

Rex

Here we go: http://en.wikipedia.org/wiki/Gramm–Leach–Bliley_Act

You know, I read that earlier and didnt see any direct correlation in the article but it seems to be the most obvious reason. A 7000% increase overnight with no looking back is one heck of an evolution.

Rex

The Irony is that the Gramm–Leach–Bliley Act got rid of the Glass–Steagall Act of 1933 which was put in place after the Great Depression to avoid a future Financial collapse by the very same players. Ooops, can you say 2009.

That is why some say the collapse we are seeing has been engineered.

Interesting. Las, is are there any credible names saying it was engineered?

Credible names is very subjective. All in who you trust at the end of the day.

"Engineered" might be a little much for my taste but it was certainly done without regard for anything other than profit for a few at the top. More than anything it's probably a good example of "free market" ideology gone bad because no game can be played without rules. The quick and simple of it all started with the Gramm-Leach-Bliley and the repeal of the Glass-Steagall. This and the Futures and something something Act of 2000 deregulated the industry and further allowed for the merging and creating of banks "to big to fail". In addition the deregulation allowed banks to leverage themselves well beyond the safe levels employed from the lessons we learned from market conditions leading up to the Great Depression. No oversite was carried out on new and exotic investment instruments that were being created by the likes of hedge fund manager John Paulson who was the main culprit in bundling sub prime mortgages in with other investment elements and then securing A ratings on these "junk bonds". His hedge fund and others aggressively marketed and sold these securuties to unsuspecting investors all the while Paulson and his group were positioning against these deriviatives in the market. When it crashed he and others made BILLIONS. All the to big to fail banks got bailouts and all the key players made out scott free while the American people will have to foot the bill for generations to come.

As an interesting side not, the way they fed this machine to the brink of failure was the announcement of President Bush's "Home Ownership Society" in which "X,000 low income Americans will own their own homes by the year..." That's how it was sold to the American people but the underlying reality was it was a way to completely deregulate the mortgage industry. I owned a mortgage company at the time and every bank and broker in the country was writting and refinancing loans that had no chance of ever being paid back and most of the recipients of these loans were doing nothing more than buying the sales pitch being thrown at them.

It was all very cozy.

Hi, i imagine you saw a 7000% increase of volume on some chart provided by your broker. If you look here< http://en.wikipedia.org/wiki/Foreign_exchange_market> you will see it was not the case and volume was lower in 2001 then in 1998 for example. I hope this helps.

Sorry, just wanted to help.

Here's another good article http://www.pbs.org/wgbh/pages/frontl...ll/demise.html on the subject.

Thanks for that reference, it makes me wonder if the increase reflected on the charts was maybe a change in the way the retail industry calculated volume? The first thing I did when I noticed it was confirm with charts from other platforms. I have about 10 others and looked at my top 4, and they all reflect the volume increase. I would be interested to hear if other peoples charts show the increase. It's most easily seen (MT4 platform) by going to daily, then shrinking the size as far as it will go.



Hey, no worries. I appreciate the response. It's a great article with alot of great history.


Yeh, that's a good one. I remember watching a version of it on PBS and remember being a bit put off by the ommissions of some of the key players but they have to play in the sand box with same folks who provide them funding so their hands were tied to a certain extent. I think they did as good as they could.

Thanks Rex, Slack for the info. In terms of expansion, the most recent BIS survey passed me by: we're now up to $4bn/day up from $2.2bn in 2004 (see below). The increase in volume - I'm guessing your looking at tick vols right? - would probably be a function of algo trading so increase in transactions but not necessarily increase in traded volumes. Still, it's high.

The bit that made me spit out my tea:
"3. Emergence of Retail Investors (Pat yourself of the back)
- BIS estimates that retail investors accounts for 8-10% of spot FX volume ($125-$150B a day)
- In Japan, retail investors represent 30% or more of spot trading volume"

Incredible.

Re the cosy coincidences - I agree.


http://www.kathylien.com/site/insigh...trillion-a-day

http://www.forextv.com/forex-news-st...-volume-growth

Ah, that has got to be it. All the automated computer trading jumping in and out of ultra short term trades all day long. Thanks triphop!

Here is documentary "Inside Job" regarding the engineering of the collapse. Whether you believe it or not, still a good movie.

http://www.openculture.com/2011/04/inside_job.html

Cheers Las - got a copy now to watch this w/end.
There was something in the papers about it yesterday, with an ex GS trader saying:
"Lex van Dam: Nowhere is the average pay per IQ point higher than in the City. How is it possible that bankers get such enormous bonuses still? The money doesn't just appear out of thin air. If you're not sure where the money comes from, then it probably comes from you."

Fitting.

http://www.thisislondon.co.uk/standa...rash-coming.do