London traders brace for EU referendum

[LONDON] London's City finance district is set for a sleepless night on Thursday as traders hunker down to await the hotly-anticipated EU referendum result.

Global stock markets rallied on Monday as investors cheered polls suggesting Britons may choose to stay in the European Union in the crunch vote.

But with three days to go, the "Remain" camp is still neck-and-neck with the "Leave" campaign in the main polling average, despite modest gains.

With all the world's eyes on London, the British capital financial hub - known as the Square Mile - is preparing for an anxious night shift.

The official result is not expected until the early hours on Friday but some hedge funds and banks have reportedly commissioned private exit polls, which could make the value of the pound the key index to watch on referendum night as traders move money based on the results.

Alan Clarke, head of European fixed income strategy at Scotiabank, is among those who have made special sleeping arrangements for Thursday.

"I am going to be staying in a hotel very near the office and hopping in and out of the office through the night depending on how things are going," Clarke told AFP.

"It is a balancing act - being on top of the issues/outcome working in the early hours, versus being top of your game on the Friday when the result is clearer. I'm hoping to find the middle-ground," said Mr Clarke, who lives in Cambridge.

A Brexit would likely spark a slump in the pound and with "contagion effects" hitting markets worldwide, the International Monetary Fund has warned.

The country's possible withdrawal from the 28-nation bloc has stoked fears of a blow to the economy of both Britain and the EU, with ripple effects throughout a weak global economy.

At Dutch lender Rabobank, the foreign exchange trading division will remain up and running throughout Thursday night and into Friday.

Some Rabobank staffers may also stay in hotels on Thursday to allow for an early start.

"In addition to our regular Hong Kong team, the foreign exchange trading desk will be staffed all night in London," said senior currency strategist Jane Foley.

"E-commerce will also be working all night to ensure a smooth running of our electronic platform."

Other major banks, including Barclays, HSBC, Morgan Stanley and BNY Mellon, have also confirmed plans to boost staffing levels to monitor any volatile market moves and advise clients.

The referendum outcome is seen all the more uncertain after most pollsters failed to predict a win for British Prime Minister David Cameron's Conservative in last year's general election.

"If we have learnt anything from recent elections, it's that opinion polls are not gospel and may well shift over the coming days again, driving yet more volatility," said Joe Rundle, head of trading at ETX Capital.

The Spreadex trading firm has decided to double the number of London traders on Thursday night.

"In either eventuality - be it Brexit or no Brexit - the traders are expected to be very busy," Spreadex analyst Connor Campbell told AFP.

"If Britain chooses to leave the EU the immediate market ramifications are clear, and Spreadex will require all hands on deck to mop up the bloodbath.

"If the country opts to remain in the EU, on the other hand, an influx of fresh traders, and the return of those who had sat out the run-up, will still mean the desk will be busier than usual." But Adam Jepsen, founder of trading firm Financial Spreads, recommended a more laid-back approach to the referendum result.

"A simple solution is to sit on your hands," he wrote in a note to clients.

"Just watch Euro 2016, take up a hobby, learn how to play Minecraft, take care of that errand you have been putting off for two months or finish the DIY you've been putting off for two years.

"There will be plenty of trading opportunities after the result has been announced and the markets have had a little time to calm down."

AFP