Financial firms are boosting staffing ahead of election night as traders are expected to panic transact as the results roll in.
Investment managers, brokerages and banks are all increasing their numbers as they expect trading volumes to rise on and around Election Day amid expected volatility, according to Reuters.
Elections and other political events can prompt traders to go back on bets, leading to raised risks that may put increased pressure on trading systems.
Vice President Kamala Harris and former President Donald Trump are in a 50-50 race to the finish on November 5, with the notion of no clear winner being announced until days or even weeks after the election creating heightened tensions for traders and investors, the news agency notes.
As Trump has suggested that he may not accept the results of the election should he lose, the risk of a contested election is adding to the concerns.
Trump and Harris have wildly different policy ideas affecting trade, markets, foreign policy, and the economy, raising the stakes of the outcome.
The regional head of client solutions for Capital Markets, at Northern Trust, Grant Johnsey, told Reuters: “We are preparing here from a market standpoint, for at least a week of uncertainty, of not knowing who that president is.”
He added: “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.”
Those taking part in the market are attempting to make sure that they’re not surprised by increasing volatility, with recent shocks to the system including the 2016 Brexit vote and Trump’s victory against Hillary Clinton in November of that year.
A major unnamed US bank is adding a full trading desk to its global overnight team in New York to take care of the expected increased demand from clients, a source at the bank told the news agency. The bank is also set to adjust its numbers of staff if the results of the election are delayed.
A large retail brokerage is also ensuring that they have staff to handle questions from investors at all hours and is keeping an eye on social media for any unanticipated events. The brokerage has reviewed its systems to make sure they can handle sudden volatility, a person familiar told Reuters.
The chief operating officer at exchange operator Cboe Global Markets, Chris Isaacson, told the news agency that previous events with high volatility, such as the 2020 election and the pandemic have tested the firm.
“We build our markets to be able to handle at least two times the biggest peaks we’ve ever seen. So, we feel quite good about our resiliency and business continuity leading into the election,” he said, adding that “we’ll have bolstered staff watching during the key hours here.”
A major US broker-dealer has been changing its training schedules for new hires and restricted activities that take staff away from their phones.
The CEO of Blue Ocean Technologies LLC, Brian Hyndman, told Reuters, “We’ll probably have more hands on deck than in a typical overnight session to address and resolve technical issues, and more management and support staff.”
In 2016, there was an overnight rush that saw the Dow soaring 257 points, going against those who predicted that the stock market would take a plunge after a Trump win, CNN reported at the time. The S&P 500 and the Nasdaq each rose 1.1 percent at the time.
After the 2020 election and the victory of President Joe Biden, the markets rose even more. In late December 2020, CNN reported that the S&P 500 surged 10 percent, almost doubling the 5.5 percent rise in the same period after the 2016 election.
