A British bond market all-nighter | FT Alphaville

A British bond market all-nighter

Pity those UK bond traders.

Instead of playing general election drinking games on Thursday night, when Britain goes to the polls, they’ll be busy trading gilt futures.

The London International Financial Futures and Options Exchange (Liffe) plans to open three hours after polls close — from around 1am London time — to give traders an unprecedented chance to offload gilts should none of the UK’s major political parties emerge with a clear victory.

In short, bond traders are so worried about the effect of a hung parliament on gilts, they’re asking to be able to work late. Sterling and FTSE 100 futures will also be open early on Liffe.

As the FT reports:

Gilts traders said Liffe’s move was an important decision and prompted by demand from London dealing desks, worried that a close poll could leave them with loss-making trading positions when they arrived back at their desks the day after the poll.

One trader said: “This is going to be an all-nighter for a lot of traders. No-one wants to leave at 6pm as we normally would, only to be back at your desk at 7am with the market selling like crazy. A trader wants to be the first to sell, not the last when the price has gone against them.”

And with opinion polls currently looking like the below bond traders could be in for a very busy night:

Related links:
When what Mervyn King says in private goes public – FT Alphaville
The UK is the next Greece – FT Alphaville
Brutal choices over deficit – FT