As all eyes turn toward Britain’s historic referendum on whether or not to stay in the European Union Thursday, traders are making plans to pull an all-nighter.
“All the trading desks are in war-preparation mode. Volatility is expected to spike up potentially more than during the Swiss unpeg event and volumes to potentially overwhelm them and their systems” said Frederic Ponzo, managing partner at GreySpark Partners, a financial consulting firm in London.
Here is as an annotated example of how volatile Cable has been recently
And as of the time of this writing
JPMorgan has booked hotel rooms near its Canary Wharf offices, while Barclays is bringing in sleeping bags and even sending some employees home today so they can be fresh for later on.
As FX trades 24 hours a day, traders will need to be tuned in throughout the entire process.
Major banks in North America are planning to staff their FX and rates desks straight through the night as results come in, adding that headquarters desks in North America and London will be staffed throughout the night, while employees in subsidiary offices may be dark for several hours but will still come in overnight.
Additionally, two people at primary dealers said they will be staffed out of New York the entire night into early Friday afternoon with the expectation most trading will effectively be over by noon Eastern.
As Bloomberg reports, Enda Homan, a senior FX trader at Allied Irish Banks Plc in Dublin can’t wait to pull an all-nighter, and will be glued to his screens through dawn. “It is a unique opportunity for traders, probably not seen since 1992 Black Wednesday. Food will probably consist of noodles from the local deli, but Homan says “I will also make sure that there is plenty of freshly brewed coffee to get us through the quiet bits while awaiting the results.”
“I personally plan to stay up all night. My wife had a baby last year so I have plenty of experience being up all night. I don’t think I’ll need much more than coffee.” said Gordon Shannon, a London-based money manager at TwentyFour Asset Management.
“The whole team is coming in at 2am, when we’re likely to start getting a feel for the outcome. It’s partly curiosity, we’d be up all night anyway. We need to make sure that there’s a company message that we get out to our clients, that we are prepared for client calls and have something concrete to say.” said Ben Kumar, and investment manager at Seven Investment Management in London who helps oversee about $15 billion.
Ross Welker, a senior economist at RBS in London said “we will have research and trading coverage and there’s a 24-hour McDonald’s across the road.”
According to Barclays, about $140 billion in cash is waiting to be invested, with investors’ holdings of cash the highest since 2001 according to a BofA survey.
“Much of the frantic last-minute activity will take place in the hour or two before the early results emerge, meaning that UK bank staff will work closely with their counterparts in Asia, the open market at the time, to roll or adjust whatever hedge needs to be maintained” said Javier Paz, senior analyst at Boston-based consulting firm Aite Group.
* * *
As a reminder, here is the timing of the Brexit vote results – Good luck!
