Banks, brokers gird for Brexit-style tumult following Tuesday's election

Tue Nov 8, 2016 10:20am EST
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By Olivia Oran and Sumeet Chatterjee

(Reuters) - Big global banks, including Morgan Stanley, JPMorgan Chase & Co and HSBC are bracing for potential tumult on financial markets after Tuesday's U.S. election.

As the outcome of the most bitterly fought U.S. presidential elections starts to roll out by Wednesday in Asia, the regional markets will the first to trade on the results.

As a result, Asia-focused banks HSBC and Japan's Nomura Holdings Ltd are among institutions boosting staff levels, while others are raising the margin requirements for trading to cope with a possible spike in volume or volatility.

Bank preparations ahead of the election reflect their experience following Britain's shock vote to leave the European Union in June, when the S&P 500 fell 3.6 percent the day after the poll.

In the United States, Morgan Stanley told staff to consider using stop-loss orders, an automated trading mechanism that sells an investor's position as soon as a stock hits a preset level, if the result causes trading volumes and volatility to spike.

The bank also told advisers in its wealth management unit to prepare for election-related conversations with clients and pointed them to relevant pieces of research, according to a Nov. 7 memo reviewed by Reuters.

U.S. brokerage TD Ameritrade is adjusting staff rotas to make as many people as possible available to talk to investors who may be unnerved by any election-related volatility.

"When the markets move, it can be difficult to put emotion at bay and stick to your plan," said Kim Hillyer, spokeswoman for TD Ameritrade.   Continued...

The corporate logo of financial firm Morgan Stanley is pictured on the company's world headquarters in the Manhattan borough of New York City, New York, U.S. January 20, 2015.   REUTERS/Mike Segar/File Photo