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Wall Street prepares systems for election night trading surge

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[NEW YORK] On Wall Street, it's considered a rite of passage to spend election night at your desk, teeing up orders and making trades until the wee hours. This year could be even wilder than normal, though many will be experiencing it from home.

With a tight race and President Donald Trump already questioning any outcome that doesn't have him defeating rival Joe Biden, trading volumes are likely to spike to as much as eight times their normal levels on Nov 3, according to technology-consulting firm ITRS Group. That forecast and a spread-out workforce has the biggest banks testing their technology to make sure they can handle the extra flow.

Financial firms are telling staff and clients that this year will be different. With coronavirus-fearful voters relying on mail-in ballots, and the US Postal Service already beleaguered by delivery problems, election results could be delayed by days or longer. Mr Trump said this week he wouldn't commit to a peaceful transfer of power if a tally of ballots shows Mr Biden winning. Senate Majority Leader Mitch McConnell, meanwhile, pledged an orderly transition.

Another factor that will make this November different from past presidential elections: As the Covid-19 pandemic resurges in parts of New York and in financial hubs such as London, many traders will probably be at ad hoc workstations in their living rooms.

"We're talking to clients about the potential that it might take longer than expected," said Itay Tuchman, global head of foreign exchange trading at Citigroup. "And the period of volatility might be longer than expected just because of the dynamic of mail-in votes versus in-person votes in such a close election."

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Exchanges have said they've been seeing trades protecting portfolios against election-induced volatility for much of this year. Banks' increased attention on operational resilience comes as regulators including the Federal Reserve and the UK's Financial Conduct Authority have said they're focused on ensuring financial firms are able to adapt and rapidly recover from any disruptions.

"People are deploying more infrastructure and the questions come down from above, 'How close to capacity are we, what latency are we having?'" said Guy Warren, chief executive officer of ITRS, which has been helping banks model for volatile trading days and determine where they might see issues. "Most people can't work out what will choke until it's crashed."

Most banks aren't planning to have even half their staffs back in the office by Election Day. Some, including Goldman Sachs Group and JPMorgan Chase & Co, have had to pause plans to return workers to their offices in London following appeals by the UK government seeking employers' help in damping a Covid-19 resurgence.

At Citigroup, the firm's systems proved they could handle extra order flow in March, said Deirdre Dunn, global co-head of rates trading. That was the month market volatility skyrocketed and the bank sent workers home in droves to help stem the virus's spread. The systems' resiliency then shows Citigroup will be prepared come Election Day, Ms Dunn said.

"If I look at 2016 as a comparison, it meant a lot of people were staying in the office all night," she said. "At least at this point we can probably do some of that from our houses as opposed to being in the building at three in the morning."

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