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Banks and brokerages increase staffing for Election Day

volatility

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Concerns over no immediate winner heighten market

uncertainty

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Firms test systems to handle increased trading volume and

volatility

By Laura Matthews and Suzanne McGee

NEW YORK, Oct 23 (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 ( NTRS ).

"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 ( RDDT ) for

signs of anything unexpected, said a person familiar with the

firms' plans.

It has undertaken reviews of its systems to ensure they can

cope with any sudden increase in either volatility or trading

volume, said the person, who requested anonymity to speak about

his company's plans.

Chris Isaacson, chief operating officer at exchange operator

Cboe Global Markets, said past volatility events such as the

pandemic, the 2020 U.S. election and, recently, the fallout from

the yen carry trade, have tested the company's systems.

"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.

Still, along with 24/7 staff, "we'll have bolstered staff

watching during the key hours here," he said.

The Cboe's Volatility Index, which tracks the stock market's

expectation of volatility based on S&P 500 index options,

typically rises around 25% between July and November in election

years, as investors weigh the market implications of candidates'

policy proposals, BofA data showed.

But the "election bump" in October VIX futures, which also

encompass the Nov. 5 vote, has been smaller than in previous

years.

NYSE and Nasdaq declined to comment.

Many in the market, however, are taking no chances.

A large U.S. broker dealer is adjusting new hire training

schedules and limiting any activities and meetings that take

staff away from their phones, a source at the firm said.

For Joe Hoffman, chief executive officer at Mesirow Currency

Management in Chicago, it will be crucial to have access to

relationship banking as it can be "really important during times

of stress" when liquidity might dry up on the screens.

Brian Hyndman, CEO of Blue Ocean Technologies LLC, whose

automated trading system powers overnight trading for Robinhood

and dozens of other brokerage clients, said he was prepared for

increased trading and volatility, but couldn't predict in which

assets.

"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," said Hyndman.

(Reporting by Laura Matthews and Suzanne McGee; Editing by

Megan Davies and Lincoln Feast.)