Brexit

United Kingdom

Mounting clamour around the prospect of the UK voting this summer to leave the European Union raised the risk stakes for currency and options traders this week, but some volatility traders preferred to pin their hopes on the European Central Bank producing another ‘big bazooka’ next month.

Any fears that investors might be nervous about sterling bonds in the run-up to the UK’s referendum on European Union membership eased with a pair of deals on Tuesday.

The London Stock Exchange Group and Deutsche Boerse are in talks over a potential merger, the boards of both groups said in a joint statement on Tuesday.

Options market participants have demanded higher premiums to bear exposure to volatility in the British pound after talks in Brussels failed to produce a decisive deal to help UK prime minister David Cameron win the upcoming referendum.

National Australia Bank found itself taking on the might of London mayor Boris Johnson alone on Monday morning, launching a short sterling senior deal as other borrowers shied away from a nervous FIG market.

Prospectuses for UK IPOs are now routinely warning investors that the country leaving the European Union is a risk factor — a marked change from last year.

Derivatives market prices reflect growing uncertainty over the UK's forthcoming referendum on European Union membership, analysts said this week, even though the vote will not be held before June at the earliest and the Brexit campaign is widely expected to fail.

UK banks could look to stockpile their funding in 2016, as the country’s forthcoming EU membership referendum will cause capital markets to snarl up later in the year.

David Cameron will announce tomorrow that the UK is now heading for a referendum on quitting the EU. Leaving the union would be the biggest threat to London’s financial markets for decades. While europhiles slept, euroscepticism has grown strong in the UK. It’s time it was properly challenged – with the facts.