One week to go. – On Thursday June 24th, traders in the City of London – and globally – could find themselves at the eye of a maelstrom the likes of which haven’t been seen for 24 years. Exhilarated trepidation reigns.
“It is the biggest planned risk event that anyone can remember,” one senior FX trader said of the outcome of the U.K.’s EU referendum. “If it’s Brexit, then we’re looking at something that’s at least on the scale of Black Wednesday,” Nick Parsons, global co-head of FX strategy at National Australia Bank and a veteran of the 1992 sterling crisis, told Reuters. “You look forward to days like this,” a bond trader told the news outfit. “All the traders are going to be in … They don’t like missing big moments,” a senior banker added.
What could go wrong? With the odds on Brexit narrowing, policy makers and investors are going for worst case scenarios. The Bank of England will reportedly be staffed overnight with senior policy makers “on call” in case markets go into meltdown. An asset management firm is running tests to see if it could cope with a 30% fall in sterling. The London Stock Exchange is adding emergency capacity for transaction reporting in case there’s a huge spike in volumes. And traders are, of course, preparing to work through the night.
“We’ve all seen U.S. elections, UK general elections, we’ve had the Scottish referendum, the collapse of Lehman and QE but this is by far and away the biggest risk event that has presented itself to the UK,” said the head of money markets at Investec.
Separately, by the time you’re 38 you might think the hours you work in banking will have abated somewhat. You’d be wrong. New York Magazine has spoken to a 38 year-old banker with a child who’s working as hard as ever: “I work 12 to 15 hours a day, take the kid for a walk every morning, and — Rodney Dangerfield–style — I get no respect,” he complains. ” – I am just family finance, and apparently I should do better in that department.”
Impending Brexit didn’t prevent five senior Citi FX traders from going on their annual Ferrari jaunt to France. (Financial Times)
Assets in the UK’s asset management industry have fallen by nearly £200bn to £900bn over the past year, as a result of the concern about a British exit, or “Brexit”, from the EU. (Financial Times)
“Brexit worries are feeding through and investors are losing faith that central banks will support risky assets. That means they are thinking about the individual credit risk of countries again.” (Financial Times)
Investors in Europe’s equity and derivatives markets are facing the prospect of higher margin calls from the region’s clearing houses. (Financial News)
Silver Rock Financial, Michael Milken’s family office, just transformed itself into a hedge fund. (Bloomberg)
Norway’s concessions to the EU on financial services rules are a warning of what could happen to the UK if it leaves the EU. (The Local)
SocGen thinks prime brokerage will keep growing. (The Trade News)
Sleep-deprived leaders are less inspiring. (HBR)
Simple tricks that will help you ace a job interview but rob you of your innocence. (Clickhole)