Greece’s referendum on Sunday means a short weekend for foreign-exchange analysts and traders, some of whom will rush to their desks even before the official opening for currency trading at 5 a.m. Sydney time on Monday.
Voting is scheduled to close at 7 p.m. in Athens on Sunday, or 2 a.m. Monday in Sydney and traders will be eager for results to start trickling out. The euro dropped almost 2 percent early June 29 after Greece called its referendum, and a “no” vote this weekend could spur a similar opening slide.
UBS Group AG, the world’s fifth-biggest foreign-exchange trader, and Barclays Plc, the third-largest, will be gearing up for a busier opening to the Asian week than usual. In the past year traders had to weather votes on Scottish independence, the Swiss National Bank’s gold policy, as well the election in Greece that brought Syriza to power, all of which have had results announced outside of normal trading hours in their local markets.
“The FX markets will open on Monday at 3 a.m. Singapore time,” said Anthony Hall, regional head of foreign exchange, rates and credit in Asia Pacific at UBS. “We will have much higher levels of staffing in at that time in order to handle the expected higher volumes and volatility as news of the referendum results comes out.”
As the previous election shows, Greece’s vote has the potential to fuel exaggerated price swings as markets reopen.
“A ‘no’ vote would open up many more questions than answers -- some of those relate to Greece, some relate to how Europe may function going forward,” said Robert Rennie, the global head of currency and commodity strategy at Westpac Banking Corp. in Sydney, “A ‘no’ vote will drive the euro lower. A ‘no’ vote will mean long-term investors look elsewhere.”
Rennie will be cutting his weekend short as the fate of Greece -- and the euro bloc -- hangs on the referendum’s outcome. He plans to start work at about 5 a.m. Monday, two hours earlier than usual, to follow the outcome from Sunday’s vote on the terms of Greece’s bailout, and is bracing for volatility.
Retail currency platforms, which faced client losses in the wake of Swiss franc price swings in January, are also taking precautions to protect against turbulence. FxPro Group Ltd. has increased its margin requirements, or the extra deposit it demands from clients, for new orders to trade the euro, Group-of-20 currency foreign-exchange crosses and precious metals until midnight London time on Sunday. Saxo Bank A/S also says it plans to alter margins on some currencies.
The euro was 0.2 percent higher at $1.1103 as of 4:21 p.m. London time, paring a second weekly decline, as a Bloomberg poll showed Greece is divided right down the middle heading into Sunday’s referendum. One-month implied volatility was at 12.59 percent on Friday from a 3 1/2-year high of 15.32 percent reached June 29.
Greek Prime Minister Alexis Tsipras is campaigning for citizens to vote “no,” while the rest of the 19-nation bloc says a clear “yes” could get the country back on the path to reform. Greece’s finance minister, Yanis Varoufakis, vowed to quit if voters don’t support the government, saying he would “rather cut my arm off” than sign a deal that fails to restructure the nation’s debt.
Barclays will have “research, sales and trading staff monitoring the Greek referendum intently over the weekend, overlapping with Asian trading,” the London-based bank said in an e-mailed statement Friday. “The FX teams will be in the office from 5 p.m. on Sunday afternoon to follow developments.”
A poll commissioned by Bloomberg showed 43 percent intend to vote “no” to reject the austerity demanded by creditors in exchange for financial aid and 42.5 percent back a “yes” to accept the conditions, the survey of 1,042 people by the University of Macedonia Research Institute of Applied Social and Economic Studies showed. The margin of error was 3 percent.
For market participants like James Wood-Collins, the chief executive officer of Windsor-based currency manager Record Plc, previous votes over the past year are helping to map out how to handle the latest political turmoil.
“It’s more a case of us planning ahead as we’re now doing, looking at, for example, positions we would be due to roll early next week and re-scheduling them, or taking other steps to avoid having to trade in what could be a disrupted, volatile or illiquid market,” he said. “This is analogous to the approach that we took for the Scottish independence referendum last September -– as then, these precautions may prove unnecessary, but it’s better to be safe than sorry.”
Nizam Idris, head of currency and fixed-income strategy at Macquarie in Singapore, will start two hours earlier at 5 a.m. on Monday. The Sydney-based bank’s currency traders, who are based in Singapore, will be come in at their usual Monday start time of 2 a.m.
“The risk of contagion is pretty low but the market is still very cautious,” Nizam said. “The Greek referendum is an important piece of information that everybody’s looking for.”