Volatile trading linked to Britain’s referendum

CHICAGO (Reuters) – Global financial exchange operators and brokers are preparing for volatile trading linked to Britain’s referendum on Thursday on whether to stay in the European Union.Google+

A supporter wears a Vote Leave badge during the final speech of the EU referendum campaign by Nigel Farage, the leader of the United Kingdom Independence Party (UKIP), in London, Britain June 22, 2016. REUTERS/Toby Melville
A supporter wears a Vote Leave badge during the final speech of the EU referendum campaign by Nigel Farage, the leader of the United Kingdom Independence Party (UKIP), in London, Britain June 22, 2016. REUTERS/Toby Melville

Markets have been racked for months by worries about what a Brexit, or a British exit from the EU, would mean for Europe’s stability. The bulk of recent polls suggested the outcome was too close to call.

If Britain exits the EU, it would be the biggest blow to the 28-nation bloc since its foundation. The EU would be stripped of its second-biggest economy and one of its two main military powers, and could face calls for similar votes by anti-EU politicians in other countries.

Here are actions that some exchanges and brokers have taken in advance of the vote:

* CME Group Inc doubled the special price fluctuation limitsfor all currency futures and options. The company also revertedto the price fluctuation limits it normally keeps during regulartrading hours for all interest-rate futures, allowing for biggerprice swings than are normally permitted during non-U.S. tradinghours.    * CME “determined that there is a strong likelihood that the’Brexit’ vote may result in increased price volatility in CME FXand CME and CBOT Interest Rate futures products,” according to anotice. The company said “emergency action is being taken as aprecautionary measure.”    * Intercontinental Exchange Inc told customers that circuitbreakers, known as interval price limit levels, for all ICEFutures U.S. products are subject to intra-day changes based onmarket conditions at any time.    * Bats Global Markets Inc, the second-largest U.S. equitiesmarket operator, said it “will be engaged in detailed monitoringof all trading on the Bats markets, and the market overall.”    * CBOE Holdings Inc, owner of the Chicago Board OptionsExchange, said it had not put any special trading rules,restrictions or limits in place for the Brexit vote.    * Broker INTL FCStone Inc raised the amount of cash thatcustomers have to deposit with them to trade gold, silver andsterling futures, a relatively rare step. The company said itbelieved the increases were “in line with what other marketparticipants are doing.”    * Online currency broker FXCM on Wednesday raised requiredmargins for the second time in less than a month for 18 major FXpairs, advising clients to put aside more funds against possiblelosses from the UK referendum.

(Reporting by Tom Polansek in Chicago. Additional reporting by Saqib Ahmed in New York.)

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