Christmas Canceled for Traders as Brexit Goes Down to the Wire

For London traders hoping to unplug over the Christmas break, their managers have a message: be ready to work.

With Brexit still unresolved before the year-end deadline, many firms are warning staff that the usually quiet festive period could turn frantic. Traders are being told to have their laptops close to hand or return to the office when news breaks.

“It’s not all ‘down tools’ on Christmas Eve to the fourth of January, unfortunately,” said Neil Burns, operations director at foreign exchange trader Monex Europe. “The planning and uncertainty has easily been the most difficult thing we’ve seen.”

Officials are cautiously predicting a trade deal between the U.K. and the European Union within days, but a resolution is unlikely to ease the need for round-the-clock cover, with politicians, diplomats and bureaucrats in Westminster and across the EU rushing to review and sign off an agreement before Dec. 31.

And there’s still a real possibility of no deal -- an outcome that would likely upend currency, stock and bond markets.

“The never-ending Brexit discussion has taught us that we have to be always ready for new headlines or new surprises,” said Fatih Atalay, head of foreign exchange trading at Swissquote Bank SA. “We are going to be well staffed and well prepared. We have had enough market events in the past to learn that there is no such thing as holidays for these.”

TP ICAP Plc, the world’s biggest interdealer broker, will have more desks on call in key asset classes over the festive period to support clients with any market volatility. ABN Amro Bank NV will be suitably staffed, according to Nils Kostense, the Dutch lender’s head of bond trading.

Pandemic Prep

At least finding holiday cover is easier this year, with much of the City of London now used to remote work during the pandemic.

“Perversely, the Covid outbreak prepared traders and market-makers,” said Ben Kumar, senior investment strategist at Seven Investment Management LLP in London. “You can say to someone, ‘I know you are on holiday, but we really need you today. Could you just open your laptop and login?’ And all the systems work.”

Rotas setting out who’s on call at night or on public holidays were a common theme among the traders and strategists surveyed by Bloomberg, even though many expect markets to react more calmly to a trade deal than some other Brexit surprises.

Christmas Canceled for Traders as Brexit Goes Down to the Wire

Brexit’s unpredictable dynamics have whipsawed markets for the past four years. The most extreme case was the aftermath of the June 2016 vote, when traders worked through the night to manage a flood of sell orders as the pound plummeted to the lowest since 1985. Since then, the currency has been among the most volatile in the developed world, with some strategists saying it behaves like an emerging market.

More Deadlines

Few expect Dec. 31 to mark an end to the Brexit ructions. Monex’s Burns has been busy interviewing compliance staff for an office in Luxembourg that opened this week to ensure trading with European customers once London is firmly outside the EU. Then there’s the likelihood of more political haggling. Deal or no deal, more talks -- and last-minute deadlines -- will follow.

“Brexit is not the end of trade negotiations,” Seven Investment Management’s Kumar said. “We will be even more bored of them over the next five years than we are already.”

For now, many traders are steeling themselves in case there’s another last-minute surprise from the negotiating table to cap a volatile year.

“The question really is if they really start burning the midnight oil and do something on New Year’s Eve,” said Kieran Cleere, a senior trader at at Silicon Valley Bank. “But let’s hope they do something sensible and take some holidays themselves too.”

©2020 Bloomberg L.P.

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