‘Black Wednesday’ ghost beckons London traders

London, June 15: The world’s biggest banks including Citi and Goldman Sachs will draft in senior traders to work through the night following Britain’s referendum on EU membership, set to be among the most volatile 24 hours for markets in a quarter of a century.

A vote to leave the European Union on June 23 would spookinvestorsbyundermining post-World War Two attempts at European integration and placing a question mark over the future of the United Kingdom and its $2.9 trillion economy.

Citi, Deutsche Bank, JPMorgan, Goldman Sachs, HSBC, Barclays, Royal Bank of Scotland and Lloyds are among those banks planning to have senior staff and traders working or on call in London as results start to dribble in after polls close at 2100 GMT, according to the sources.

That almost-certain rapid repricing could set the scene for one of the rockiest sessions since traders wrestled down the value of sterling on Black Wednesday, September 16,1992,whenBritaincrashed out of the European Exchange Rate Mechanism.

“If it’s Brexit, then we’re looking at something that’s at least on the scale of Black Wednesday,” said Nick Parsons, global co-head of FX strategyatNationalAustralia Bankandaveteranof the1992 sterling crisis.

Jamie Dimon, chief executive officer of JPMorgan Chase&Co,toldemployeeson a visit to Britain this month thatif thevotewastoleavethe EU, the bank would have to have “teams of people thrown on what that means”.

“We won’t know what it means:thereisawiderangeof outcomes,”Dimon,asupporter of Britain’s membership

June 15: The campaign to keep the UK in the EU is regaining momentum with a warning from Chancellor of the Exchequer George Osborne that a vote to leave could create a fiscal crisis. In a speech outside London on Wednesday, Osborne will warn of a 30-billionpound ($43 billion) “black hole” in public finances that would open due to less trade and investment, requiring cuts in spending in health, education and defense sectors as well as a rise in tax. He is due to speak after five of the last six published polls showed the “Leave” campaign ahead with just over a week to go until the June 23 referendum. Bloomberg who has warned of job cuts at JPMorgan in Britain if there is an Out vote, said in the broadcast speech.

A vote to leave could unleash turmoil on foreign exchange, equity and bond markets,spoilingbetsacrossasset classesandpotentiallytesting theinfrastructureof Western markets such as computer systems, stock exchanges and clearing houses.

Federal Reserve chair Janet Yellen has cautioned that a Brexit vote could shake financial markets and potentially push back the timing of the next rise in US interest rates. Reuters