By Laura Matthews and Suzanne McGee
NEW YORK (Reuters) – Banks, brokerages, investment managers and exchanges are adding staff to handle high trading volumes on and around Election Day with markets expected to become volatile as results come in.
Political events can trigger wild gyrations that can force market participants to quickly unwind bets, raising market, liquidity and other risks that could pressure trading systems and market infrastructure.
With Democratic Vice President Kamala Harris and Republican former President Donald Trump neck-and-neck in many polls ahead of the Nov. 5 vote, the prospect of no immediate winner being clear is heightening concerns among investors and traders.
There is also the risk of a contested election following Trump’s efforts to overturn his loss in 2020. Trump has indicated he might not accept the results of this election if he loses.
This election is seen as pivotal as Harris and Trump have markedly different views on policy that could have major implications for the economy, foreign relations, markets and global trade.
Harris led Trump by a marginal 46% to 43% in a Reuters/Ipsos poll released on Tuesday, within the margin of error, while just seven battleground states are likely to be decisive in determining a winner.
“We are preparing here from a market standpoint, for at least a week of uncertainty, of not knowing who that president is,” said Grant Johnsey, regional head of client solutions for Capital Markets, at Northern Trust.
“This just means ensuring we have sufficient coverage to handle more volume and volatility, managing vacation schedules accordingly, and that we are prepared for intraday ups and downs as election news unfolds,” he said.
Market participants are trying to make sure they are not caught off guard by surges in volatility. Recent surprises have included when Britain voted to leave the European Union in 2016, as well as when Trump defeated Hillary Clinton later that same year.
STAFFING, SYSTEMS TESTING
Ahead of the upcoming presidential election, one large U.S. bank is supplementing its global overnight team with a full trading desk in New York to handle the expected greater demand from clients, according to a source at the bank who is familiar with the situation.
This bank also plans to adjust staffing needs as necessary if a presidential decision is delayed.
Separately, a large retail brokerage is making sure staff are on hand to respond to investor questions around-the-clock and is keeping tabs on social media sites such as Reddit for signs of anything unexpected, said a person familiar with the firms’ plans.
