UBS: Brexit Volatility May Affect Trading Execution

Swiss bank UBS warned its clients it might fail to execute some orders on its electronic trading platform, as Thursday's Brexit referendum is expected to hit liquidity and cause extreme volatility.

The U.K. is bracing for a landmark vote on Thursday over whether to stay in the European Union, or leave. The result of the vote is expected to spark panicked moves on financial markets, especially in foreign exchange trading involving sterling.

UBS said that regardless of the outcome, there could be an increase in volatility and an impact on trading volumes, which in turn could affect its ability to execute clients' positions, «Reuters» reported.

Turning Non-Tradable

The Swiss bank is the third-largest player in the $5 trillion (S$6.7 trillion) a day global currency market, according to an annual survey conducted by Euromoney.

«In the event that extreme market moves occur in an environment of limited liquidity, our principal spreads may widen for both electronic and voice trading, liquidity may reduce and prices may turn indicative (i.e. non-tradable) for periods of time,» UBS said in a statement on Wednesday.

«In the event that extreme market moves occur, giving rise to limited liquidity in certain currencies, we may not be able to fill limit orders or take profit orders at the levels, or using the methodologies, expected in normally-functioning markets,» the bank said.

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