Barclays interbank FX platform BARX goes bearish on Greece, warns of impending European market volatility

As Greece’s position within the Eurozone teeters on the brink of obscurity, Barclays has issued a warning to commercial clients of its FX trading platform that a sharp drop in liquidity and potential dislocations in the euro could occur tomorrow.

In the closing hours of last week’s business timetable, Reuters was able to view a letter which Barclays sent to clients of its electronic interbank trading platform BARX on Thursday, stating that there is a risk that currency markets, especially the euro, could open at a significantly different level from Friday night’s close.

The warning issued by Barclays represents an unusual move, as Switzerland’s national bank issued no such warning prior to its removal of the 1.20 peg on the EURCHF pair on January 15, an action which sent the Swiss franc soaring in value so rapidly that many FX firms were exposed to negative client balances, with some companies which were previously well capitalized having gone west in just one day.

“As a result of current uncertainty surrounding the ongoing position of Greece in the euro zone, there is a chance of dislocation and highly illiquid conditions in the euro FX market,” the letter said.

“We will continue to watch client orders in BARX from our normal opening time of 5 a.m. (6:00 p.m.) in Sydney. However, there is likely to be an impact on the service offered by BARX. In particular, BARX may only be available at wide spreads, and there might be delays as a result of low levels of liquidity due to the disrupted market conditions.”

Barclays further added that the BARX platform would begin to fill orders gradually as liquidity builds up and voice orders will not be fulfilled before 5 a.m. Sydney time.

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