Exchange Europe in anticipation of the new stress. Italy were preparing for a major referendum
Exchange Europe in anticipation of the new stress. Italy were preparing for a major referendum
© Reuters
By election day brokers London Capital Group, and division Saxo Bank will ask customers larger deposits before the start of trading that will create additional protection from potential market imbalance.
After the shocking result of the British referendum and the victory of Donald trump in the presidential election, the departments of trade operations preparing for another sleepless night 4 Dec. This time in Italy, where a referendum is held on constitutional reform, and in the case of its adoption, the political system in the country changed dramatically.
In particular will be curtailed the powers of the Senate, the procedure for its formation and financing, and also strengthened the Executive power in the country. It will also decrease the powers of the regions: energy, strategic infrastructure, and civil defense will be addressed directly by the President. In the end, the vote to reduce the powers of the Senate turned into the assessment office of the Prime Minister Matteo Renzi and the potential threat to investors. Write about it, Chiara Albanese, Stefania Spezzati and Charlotte Ryan in her article published on the website Bloomberg.com.
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The previous night in the office taught by Neil Staines, head of trading at ECU Group office (London), than you need to watch. “We need to pay less attention to polls and more to watch the markets with liquidity (the ability of the securities to be sold quickly), and pain thresholds, in particular,” he said.
This time, we will focus on the impact rather than shock. All major polls before a two week break showed that Renzi is lagging behind with a slight margin, and the question is what happens next.
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The unpredictability of the ratio of Euro-dollar has reached the level that we saw only after the victory of trump. Markets are preparing for the possibility that the defeat Renzi, who has initiated controversial reforms, may cause early elections that will be beneficial to the “five star Movement”, the populist group that wants to hold a referendum on Italy membership in the Euro area.
41-year-old Renzi has staked his political future when he said that in case of loss, will retire, and the first forecasts appeared shortly before midnight.
“We need to ask how the market will react to what they expect,” said Andy Soper of Nomura (London). “The difference this time is that is important, not so much the result of how, what will win or lose on the vote. In this equation, many unknowns”.
The Euro, which was traded throughout the night, fell 3% against the dollar this month, while Italian government bonds lost 2.5%. The market opens the next morning, along with the stock exchange. The key issue for traders – liquidity in the early hours. It is important that a sufficient number of banks were buying and selling currency, when the currency markets in Asia.
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Brokers, including London Capital Group, and division Saxo Bank, asks customers have larger deposits before the start of trading that will create additional protection from potential market imbalance. Also more staff. London Capital employs additional people at night, and the division Citigroup is planning the morning shift, said Saib sachet, head of trading-European government bonds in the Bank.
“We are preparing for the worst,” said Lawrence Crosby, head of trading at London Capital Group. Liquidity can potentially be “particularly bad” level, when will publish the first projections, but with the additional people, the conditions of the auction will be “better than in a normal day,” he said.
However, the consequences of the Italian referendum will not be as large as the win or trump the decision of the UK to leave the European Union, said Richard Benson, managing Director and head of portfolio investments at Millennium Global Investments (London).
“It’s important for people,” he said. “But if you imagine that “brakcet” and elections in the United States is the Premier League, it [the referendum in Italy] only the fourth division”.
Regardless of the outcome of the Italian referendum for Manager Gordon Shannon is more important to monitor the policy throughout Europe – voting for the ballot.
“A few years ago I would have just waited to read about the results early Monday morning,” said Shannon of TwentyFour Asset Management. But not now, he said. “I’ll be up all night to track the incoming results, and if that means a couple of margaritas at 2am, that’s the price I have to pay”.
We will remind, earlier the result of the election of the President of the United States Donald trump has been the massive collapse in global financial markets. The price of lost oil and the dollar. But gold has risen in price considerably. The leading indexes fell lower even than after the terrorist attacks in USA on 11 September 2001.