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Order! Order! Pound traders brush up on parliament as Brexit stakes mount

Reuters  |  LONDON/NEW YORK 

By and Ahmed

LONDON/NEW YORK (Reuters) - How would you get an 18-second jump on a big move in the pound? Bone up on your

As if Britain's unwieldy departure from the 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 - 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 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 of England, just focus on the MPs," an at a UK 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 said.

That follows a trend sparked by the 2016 Brexit referendum that saw investment firms hire lobbyists to brief clients, including Matthew Elliott, a of the campaign, who joined 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. Traders are also encouraged to follow key lawmakers on

TELLING TELLERS

So what edge could a savvy enjoy over rivals?

Members of the vote by walking through different doorways out of sight of television cameras and onlookers. But when "tellers" - officials appointed to verify the count - assemble before the presiding officer, or Speaker, it is possible to know the outcome of the vote before the announcement.

By tradition, the winning side always stands on the right facing the

"The noes have it," bellowed after lawmakers rejected May's Brexit deal on Jan. 15.

But a trader deducing the outcome from tellers' signals would have enjoyed an 18-second advantage, an eternity in foreign exchange markets.

Sterling lost 0.3 percent of its value in that brief window.

The rowdy parliamentary sessions, punctuated by Bercow's full-throated cries of "Order, Order!", often drag on into the evening and have also seized the attention of traders in the

"I have a hard enough time understanding how the works, but yes, I have learned a lot about how the (British) parliament works," said Minh Trang, senior at Valley

"The involvement of the parliamentary house makes for pretty decent drama," he said.

Sterling plunged more than 10 percent in the immediate aftermath of Britain's shock vote to leave the in June 2016.

Market reaction to parliamentary Brexit votes has been more muted but the drama has underscored the value of human traders in a market increasingly dominated by electronic platforms.

Banks in London have provided sleeping bags and pizza for analysts drafted in overnight to figure out for clients how parliamentary amendments could shape Brexit.

But some are wary of trading on unspoken rules in boisterous parliamentary sessions.

Confusion broke out during a Jan. 29 vote, when lawmakers voted on seven amendments, or changes to the withdrawal process, including an attempt to greatly reduce the chances of a disorderly Brexit.

One of the tellers briefly stood slightly to the left of the while waiting for the result - indicating the amendment had been voted down - before eventually switching to the right.

Cheers erupted as lawmakers realised the vote had gone the other way.

(Additional reporting by Georgina Prodhan, and Virginia Furness; Editing by Frances Kerry)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, February 13 2019. 20:31 IST
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