(MENAFN- ProactiveInvestors - UK) Stockbrokers could be facing a possible systems meltdown come Friday as the outcome of the EU referendum emerges.
Whilst London''s stock market is currently caught in a certain calm before the storm, trading volumes are predicted to reach ''unprecedented levels'' as traders start jumping into the market as they react to the results.
Trading volumes were close double usual levels among retail investors on Monday - and the majority of deals were said to be buys - and private investor involvement could eclipse past records.
Chaotic scenes are predicted in the event of a Brexit result, i.e. a vote to leave, and that would be expected to trigger the highest volumes and volatility. Nevertheless, a rally that would likely follow ''Bremain'' result would also stimulate activity.
As far as the stockbrokers are concerned, nobody will want to blot their copybook by failing to cope with goings on.
Hargreaves Lansdown previously saw its online platform crash amid peak retail investor activity immediately after Royal Mail''s IPO, and it recently tried to reassure that it was prepared for the referendum rush.
Its contingency planning has seen the hiring of extra staff to man phones, as well as extended help desk hours.
Financial Spreads, a CFD and spreadbetting group which focusses on foreign exchange, says it has taken steps to prepare for anticipated heavy trading volumes its measures have included increased our server capacity, overnight hours for trading and trade support staff.
Notably, in light of predicted volatility, Financial Spreads is today increasing client margin requirements which will mean traders will need to deposit between eight to ten times more than normal to trade.
Adam Jepsen, Financial Spreads founder, said: ''it might be a quiet start to the evening for the team and so they could end up sitting around and twiddling their thumbs.
''The voting ends at 22:00 Thursday 23 June and so it may not be until 01:00-02:00 when there is a clearer indication of the result.
''Therefore we may not see a big increase in trading until 01:00-02:00.''
AJ Bell, another stockbroker, has cautioned that London''s market makers may ''buckle under the load'' on Friday and as a result everyone could suffer trading delays.
Russ Mould, AJ Bell investment director, said: ''trading could even be suspended if the market goes into freefall.''
Mould also cautioned retail investors to be ''very careful'' when trying to time trades in the market.
''Market volatility driven by sentiment rather than company fundamentals is normally short-term and people should not panic or get over excited,'' he added.
''In the end it is profit and growth that drives company valuations over the long term and people should not lose sight of that when making decisions about their portfolios.''
Broker Liberum has shared some of its tips for which companies to look out for in the event of a Brexit or Bremain vote...
Three picks if the UK REMAINS in the EU
Housebuilder Berkeley Group PLC (LON:BRK) would be a good investment should a Bremain vote triumph, as it has the most exposure to London, according to Liberum.
The broker adds that ''a remain decision would be well received as customers who have been waiting to see [the result] become active again.''
In media, Liberum thinks ITV PLC (LON:ITV) stands to gain a lot should the UK decide to stay in the EU on Thursday and has reiterated the broadcaster as its ''top buy''.
The broker is happy with the fundametals of the business, and references Spanish broadcasters who were sold off aggressively before this year''s elections, only to rally afterwards as ad spending ramped back up.
Bookmakers William Hill PLC (LON:WMH) has also been tipped to flourish should Britain still be in the EU come Friday morning.
Liberum says that EU regulations allow bookies, like William Hill, to be based in one European territory, such as Gibraltar, while operating in others.
''Brexit couldincrease the complexity of accessing markets in Europe which go down the regulated route,'' the broker explains.
Three picks if the UK LEAVES the EU
Building materials suppliers Wolseley PLC (LON:WOS) should, in theory, benefit greatly from A Brexit vote, claims Liberum.
''Wolseley makes around 80% of operating profits from its US business, and a further 10% from Canada , Nordics and Central Europe,'' the broker said, highlighting the lack of exposure to UK markets.
''The pound denominated share price should be a beneficiary of weaker pound, especially compared to the dollar.''
Jimmy Choo PLC (LON:CHOO) should be ''a relative outperformer'' in the event of a leave vote, says Liberum.
''Q1 provided comfort that the CHoo brand is showing resilience in a difficult market'' which will stand it in good stead should Britain Leave.
The broker also claims that the luxury goods brand has a ''natural currency hedge'' given that around 75% of its sales are in euro- or dollar-linked currencies.
Electronics and technology firm Laird PLC (LON:LRD) also gets Liberum''s seal of approval should Brexit prevail on Thursday.
The broker notes that 75% of revenue is in US dollar, although the company reports in British pounds.
Therefore, a 1c move in the dollar/ pound exchange rate, equals roughly a 1% move in earnings per share.
Liberum adds that 12.5% of its revenue is also in Euros, so it stands to benefit if the currency strengthens in the event of a Brexit.
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