From Volume 4, Issue Number 29 of EIR Online, Published July 19, 2005

World Economic News

London Stock Exchange Enacted Emergency Measures

According to reports now emerging in the British and German media, the London Stock Exchange enacted unprecedented emergency measures on July 7, after the London bombings. When the London stock index FTSE 100 had crashed by 207 points, the London Stock Exchange (LES) declared a so-called "fast market," an emergency measure that had not been used in the last decade, not even following Sept. 11, 2001. The "fast market" declaration means that investment banks have to shut down their "black box" computerized trading systems, by which trades are triggered without human intervention. All such automatic trading was turned off between 11:25 and 3:15 on July 7.

The other measure included in the "fast market" emergency clause allows the so-called "market makers" at the exchange to announce buying and selling prices for any stock at any time. An LSE spokesman stated: "We believe that the declaration of the fast market helped to ensure the continuation of an orderly market during a period of unusually high volumes and large market movements." In spite of the restrictions, turnover at the LSE on July 7 reached an all-time high of 361,276 trades, compared to the previous record of 310,943 trades set in March. A total of 4.75 billion stocks were traded.

European Central Bank Official Warns of U.S. CAD Unwinding

European Central Bank board member Jose Manuel Gonzalez-Paramo cautioned of a risk of a disruptive correction of the U.S. current account deficit, saying the shortfall poses an undesirable risk to global financial stability. His statement was covered by AFX News on July 14. "Global imbalances have widened, and disruptive unwinding remains a possibility," he said in a speech at a forum in Kuala Lumpur.

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