LONDON (Reuters) - Barclays stopped accepting new stop loss orders - an essential part of currency trading - on Thursday as it and other banks took action to limit potential losses and cap their exposure to the outcome of Britain’s EU referendum.

The logo of Barclays is seen on the top of one of its branch in Madrid, Spain in this March 22, 2016 file photo. REUTERS/Sergio Perez/Files

Clients of the UK-based bank, who asked not to be named for reasons of confidentiality, said Barclays had told customers on Monday it would not execute such trades, in which the bank seeks to close existing positions for clients at a pre-established price, through its machine-trading algorithms.

But it also refused all new stop-loss orders, whether over the phone or through messaging or dealing systems, as of 0600 GMT on Thursday, the clients said.

Such action is extremely rare and a measure of the big banks’ concerns that a vote to leave the European Union would roil the market as much as last year’s unexpected ditching by the Swiss National Bank of its cap on the franc against the euro.

Bank of America Merrill Lynch and UBS have both issued communications to clients this week, seen by Reuters, which warn of potential gaps in the currency services they normally provide to major institutional clients.

The moves are aimed at limiting banks’ and clients’ exposure to losses if there are substantial gaps where buyers cannot be found for the pound or other major currencies including the euro, as results of the UK vote trickle in.

Arguments over whether banks could have achieved better prices for stop loss orders were at the heart of legal disputes between financial firms over hundreds of millions of dollars of losses caused by the franc’s surge on Jan 15, 2015.

“Barclays have advised on Monday that they weren’t accepting stop loss orders via Barx algo execution,” a senior trader with one bank in London told Reuters. “Further, they are not accepting any stop loss orders from 7am (London time today).”

A second source confirmed the communication by Barclays.

The bank said it was taking steps to meet clients’ needs, including providing extra staff on referendum night.

“Our global sales, trading and research teams will be helping clients navigate markets throughout the night and post the EU referendum decision ...as far as market conditions allow,” it said.

A Barclays spokesman declined to comment further.

Sterling rose 1.5 percent, breaking above $1.49 for the first time since December as late polls taken before the start of voting on Thursday showed the “Remain” camp in front.

The euro gained almost 1 percent against the dollar and 2 percent against the yen.

NO GUARANTEES

Swiss bank UBS, another of the big six lenders that dominate the $5 trillion a day currency market, warned clients earlier this week it may fail to execute some orders on its electronic trading platform should the referendum affect liquidity or cause extreme volatility.

A note to clients from Bank of America Merrill Lynch, the currency market’s fifth largest player, warned of a number of service disruptions.

“BofAML’s electronic trading platforms have volatility controls that may temporarily suspend execution and price streaming in response to rapid and adverse market movements,” the communication said.

Normally, large institutions expect banks to conduct large trades for them in the market within a few fractions of a cent of mid-market pricing.

All this week’s statements essentially add up to a legal warning that clients cannot expect normal service in the referendum’s aftermath and may not get the deals they ordered - potentially adding up to millions in trading losses.

One senior trader said that all of the banks he traded with had made it clear to clients that if sterling or the euro started to fall by several cents, they may be on their own.

“(Banks) will be doing everything at their sole discretion in good faith,” he said.