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City traders bracing for volatility over possible Brexit

Published 23/06/2016

City workers are being drafted in to work overnight to cope with the aftermath of the EU referendum result
City workers are being drafted in to work overnight to cope with the aftermath of the EU referendum result

Market traders are gearing up for the most important night of their careers and could even stay chained to their desks over the weekend if Britain votes for Brexit, City experts are forecasting.

Currency traders will be braced for market volatility on a scale not seen since the collapse of the Swiss Franc in 2015, as "mayhem" is unleashed in the event of Brexit.

Joe Rundle, head of trading at ETX Capital, said: "If there is a Brexit there could be mayhem in the markets and traders could well have to cancel their plans and work right through the weekend. We could easily see an emergency trading session on Sunday like in 2008 and/or a temporary halt to trading on Friday.

"We've heard lots of mutterings about an emergency bank holiday and special meeting of the Bank of England. No-one really knows what might happen as there has not been anything like this to base scenarios on. There is no playbook for a Brexit."

He added that he was readying himself in the event of "wild gyrations" in the value of sterling and the possibility that some banks may fail to execute orders on their electronic trading platforms.

Britain's biggest banks are drafting in staff to work through the night on Thursday into Friday as they gear up for the EU referendum result.

Barclays, Lloyds Banking Group and US giants such as JP Morgan Chase and Citi are among those calling in senior traders and workers for what is set to be a turbulent 24 hours after voting closes at 10pm.

Market analyst Tony Cross, of Trustnet Direct, said currency and market traders were getting set for "the biggest night of their careers", adding that if Britain does vote for Brexit then they could be camped at their desks for days.

"I remember stories during the 2008 crisis of people being at their desks for a week. This is why I am a little bit surprised at how the markets are taking it because the downside implications are so vast. We really are stepping into the unknown here."

He also questioned how long it would take for the equities market to start functioning normally again if there is a Brexit vote, adding: "There's going to be so many orders for sell and how long is that going to clear?"

But he said the Bank of England was "primed and ready" to act if Britain decides to leave the European Union.

"The advantage is that there have been two situations like this in recent years: the credit crunch of 2008 and the collapse of the Swiss Franc in 2015.

"They are aware of where they need to step in to keep the wheels turning."

Barclays is understood to be planning to fully staff its client-focused teams, such as foreign exchange and commodities trading, so they can help clients manage their risks.

Part-nationalised Royal Bank of Scotland is also manning trading desks 24 hours, thanks to teams in London, Singapore and Stamford in the US.

Despite its heavy focus on retail banking, fellow high street lender Lloyds will have some staff in its commercial banking business overnight to deal with client inquiries.

A number of banks are said to be booking nearby hotel rooms and laying on food overnight for trading teams and some firms are even believed to be offering small bonuses to staff drafted in.

Andy Scott, economist at HiFX, said it was "more than possible" that it could have staff working beyond UK trading hours.

He said contingency plans were in place in the event of a leave vote, but he did not expect a market meltdown on the scale of 2008.

He added that if David Cameron and George Osborne resigned following a Brexit vote then it could bring further uncertainty to the markets.

He said: "It will depend what the conditions are like as to whether we need people coming in Sunday night".

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