Adam had it as it happened: Gold drops $30 in seconds
then CME: Large trade in gold wasn’t a mistake
A circuit-breaking 10-second halt in trading was applied (none of that rubbish in FX, pussies :-))
So, why was trading halted?
The CME (Chicago Mercantile Exchange) introduced a new circuit breaker back in March of 2013, called (get this…) ‘Velocity Logic’.
If the execution price has moved the market up or down outside a predefined points value within a predefined time period, the Velocity Logic functionality is triggered and the instrument is placed in reserved state for a predetermined amount of time.
There is more detail here and here.
I guess a gold price decline of 30 bucks in a nanopsecond sorta counts as “a predefined points value within a predefined time period”.
What a cool term … Velocity Logic …
I can’t believe ‘selfie’ was the Oxford Dictionaries word of 2013 (it beat twerking). I woulda voted for Velocity Logic.
