Traders are concerned that the London Olympics could cause temporary market disruptions, as fears grow that firms are not fully prepared for the arrival of the two-week sporting spectacle.

With London’s IT infrastructure already struggling to cope with ever-increasing power constraints, not to mention the transport chaos that could bring the UK capital to a halt in late July and early August, it appears that many firms do not have the necessary business continuity plans in place to handle the influx of visitors expected for the 2012 Olympics.

There are also fears that the hosting of the Olympics will bring a slowdown in web traffic and this has seen a temporary postponement of the creation of much-needed new data centers in London until after the Olympics.

With a perception among many firms that much of the spending to cope with the Millennium bug in 2000 was simply unnecessary, it appears that many firms are approaching the London Olympics with a more laissez-faire attitude.

A recent survey conducted by IPC Systems, a provider of voice and electronic trading communications solutions, at the Trade Tech London conference in April revealed that 70% of investment bank staff think that the City is lagging behind in preparation for the event.

And with 50% of brokers fearful that ‘Olympic Gridlock’ could cause temporary market disruptions, and one in five concerned it could even spell the end for some City institutions, it is clear that the Games are a major cause for concern in a sector that is already under strain and working hard to retain its position as a global leader.

Asset managers, it appears, are the most prepared with 76% of respondents declaring that they have a plan—a figure that comes in stark contrast to the 17% of prop traders who say they are ready with a back-up solution.

“It is perhaps not surprising that anticipation and preparedness come hand in hand, though it is concerning that prop traders seem not to recognize the potential for disruption,” said Simon Jones, senior product marketing manager at IPC, “It is possible that some companies are still suffering from a ‘Millennium bug hangover’, and are reluctant to invest in contingency plans in case they are not required.”

According to the research, the big differences in terms of levels of flexibility between the front and back office staff could also prove problematic for many banks. While many banks are being encouraged to allow staff to work from home, this could result in back office support effectively being cut off from the traders who, for regulatory and compliance reasons, will generally have to remain based in the office.

“Advanced complex financial instruments, increased government regulations and exponential increases in data are driving more elaborate trade workflows, which include more people and functional groups across more geographies, and the implications of being unable to connect with risk analysts early enough in the trade lifecycle are significant,” said Jones.

“Access to a Blackberry does not equal a reliable communications plan. This comes back to the debate around ‘allowing’ versus ‘enabling’ remote working. Compliance and transparency requirements mean that effective collaboration cannot be compromised, whether trading teams are in their normal workspace or a remote location. Financial services companies in London must be prepared to enable effective remote teams. The stakes are too high for traders to gamble with unnecessary risk.”

IPC surveyed more than 150 London-based financial industry professionals to complete the analysis.