There is little if any data to support suggestions that traders may have deliberately spurred October's flash crash in sterling, a Bank for International Settlements report said on Friday, pointing instead to a range of structural factors.
The report from the BIS Markets Committee steered clear of discussing the conduct of individual banks or traders in the 9 percent fall and recovery of the pound over a few minutes around the start of the Asian trading day on Oct. 7.
The Financial Times reported last month that regulators had been looking at the activity of a Japan-based trader at U.S. bank Citi <C.N>, the world's single biggest currency trading institution, during the currency's fall.
Citi has said its trading operations functioned appropriately in a thin and illiquid market.
"Based on the available evidence, this event (the flash crash) appears to have been the product of a confluence of factors," the committee, made up of representatives of the world's major central banks, said in the report, stressing that it had not considered "specific issues around market conduct" during the event.
It pointed chiefly to the generally low liquidity of the market at the time of day when the crash took place, along with the execution of stop-loss and options hedging orders triggered by the sharp changes in the exchange rate.
"Other factors such as 'fat finger' errors and potential market abuse cannot be ruled out given the incomplete data set, but there are little, if any, hard data to substantiate them," the report said.
Group committee chairman, Reserve Bank of Australia Deputy Governor Guy Debelle, said the report's conclusions had been factored in to ongoing work on a global code of conduct for the giant $5 trillion a day foreign exchange market.
"There are direct lessons ... which have been taken on board," Debelle said.
"These include ... participants' obligation to consider the disruptive consequences of their trading activity, governance around algorithmic execution of trades, and how market participants might best determine the low (or high) point of pricing in a flash event."