Newedge moves to cut Greece exposure

Newedge, a broker owned by French banks Credit Agricole (CAGR.PA) and Societe Generale (SOGN.PA), has told clients it will do no new business in Greece, in the latest sign trading houses are preparing for the country leaving the eurozone.

Newedge, which supports its hedge fund clients through its prime brokerage unit, said on Monday it will not conduct new business until further notice but will continue to support existing positions in Greek assets.

"Newedge is not exiting the Greek market but it has said it will not do any new business in Greece at this point in time,» a source close to the French broker said on Monday.

Newedge, and Europe's top investment banks, carry out transactions on behalf of pension and hedge fund clients that leave the banks with an exposure to the largest Greek firms.

The move to stop new business came as traders work on measures to mitigate the impact of Greece withdrawing from the eurozone, a lingering possibility as politicians argue over conditions of the country's 130 billion euro ($163 billion) bailout.

"It is a matter of precaution, a proactive measure. A number of companies have abandoned Greece in recent years. The environment is not favorable for investments,» said Manos Chatzidakis, head equities analyst, Beta Securities in Greece.

ICAP (IAP.L), the world's largest derivative broker, said in November it had been testing trading systems for six months to ensure it could handle the Greek drachma.

"We have contingency tested the Greek drachma in currency pairs versus the euro and the US dollar because our customers have expressed concerns about how the euro zone situation will play out and we have to be prepared for every eventuality,» a spokesman for ICAP said at the time.

While the London-based broker tested the drachma, it said the tests effectively ensured any new currency or number of currencies could be traded in the event of their being created by a country leaving the eurozone.

Europe's top brokers and exchanges have been watching the eurozone area closely this year for signs a member may be forced to withdraw and set up its own currency, a move that would have profound effects on these firms. [Reuters] - 

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