UBS warn of trading hiccups in event of Brexit

    UBS warn of trading hiccups in event of Brexit

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    Investment bank UBS has told clients to brace for possible trading hiccups while money transfer firms are also suspending services amid fears of dramatic currency swings caused by the Brexit vote.

    Swiss group UBS said in a note to clients there was likely to be extreme volatility and a surge in trading volumes regardless of the outcome of Thursday’s vote, which could see some trades fail on its electronic platform.

    Online money transfer service Azimo also became the latest to announce it is suspending trading from Thursday morning until after the referendum results on Friday, blaming “unprecedented circumstances”.

    Rival money transfer website Transferwise said on Tuesday it was putting pound-to-euro transfers on hold temporarily from Thursday morning.

    A raft of banking groups have been warning clients in recent days over difficult and volatile trading conditions, with Dutch lender ING and French group Societe Generale last week sending out letters.

    In its note to clients, UBS wrote: “In the event that extreme market moves occur, giving rise to limited liquidity in certain currencies, we may not be able to fill limit orders or take profit orders at the levels, or using the methodologies, expected in normally-functioning markets.”

    It said some trades “will not trigger or execute” as a result of heightened volatility.

    UBS is one of the biggest players in the £3 trillion-a-day forex market.

    The vote is expected to spark frantic moves in the pound and currency markets and banks are drafting in teams of traders to work throughout the night on Thursday to cope with the surge in activity.

    HSBC said it was providing “round-the-clock services”.
    It added: “With high-profile, market-moving events, we will have more staff working extended hours in one or more centres to make sure we can help our clients and manage our risk.”

    The Bank of England has also stepped up monitoring of banks to ensure they have the cash they need, including foreign currencies, as money markets could some under strain.

    Barclays also confirmed it has sent a letter to clients sounding the alarm over market volatility and possible disruption on is electronic trading platforms on Thursday and Friday.

    It is boosting its forex sales and trading teams and providing 24-hour coverage on referendum night.

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