Order! Order! Pound traders brush up on parliament as Brexit stakes mount
LONDON/NEW YORK: How would you get an 18-second jump on a big move in the pound? Bone up on your parliamentary protocol.
As if Britain’s unwieldy departure from the Europe Union were not bewildering enough, Brexit has thrown up another conundrum for investors: parliament.
Centuries-old and often idiosyncratic, the institution is asserting more control over Brexit negotiations.
The result is wild swings in sterling during volatile Brexit votes.
Trading off parliamentary debates sounds perilous.
But as currency traders have discovered, a little knowledge of the protocols used by the 650 elected members of the lower chamber – the House of Commons – can win them a useful edge over rivals.
Recent high-stakes parliamentary votes have left many onlookers scrambling to interpret often obscure signals.
Not wanting to be caught out when lawmakers next vote on Prime Minister Theresa May’s Brexit deal, traders are brushing up on the practices of parliament, where members cannot address each other by name and laws are traditionally inscribed on calf skins.
“My boss said “forget about the Bank of England, just focus on the MPs,” an options trader at a UK bank told Reuters, declining to be named.
To get that extra insight, banks have paid ex-politicians to brief traders on parliament’s inner workings, the trader said.
That follows a trend sparked by the 2016 Brexit referendum that saw investment firms hire lobbyists to brief clients, including Matthew Elliott, a co-founder of the Vote Leave campaign, who joined stockbroker Shore Capital last year.
For a crucial jump on timings, traders said their companies had installed audio feeds directly relaying parliamentary action a few seconds faster than television broadcasts. — Reuters