City braced for more de­par­tures

The Sunday Telegraph - Money & Business - - Business - By Iain Withers

THE City faces a fur­ther wave of de­par­tures and “very volatile mar­kets” if the UK fails to strike a deal on reg­u­la­tion of £41 tril­lion worth of deriva­tive deals, ex­perts have warned.

The world’s largest trade body for de­riv­a­tives traders, the Wash­ing­ton­based Fu­tures In­dus­try As­so­ci­a­tion (FIA), told The Sun­day Tele­graph its mem­bers faced un­prece­dented dis­rup­tion without progress be­fore Christ­mas.

A se­nior Brus­sels source briefed on Eu­ro­pean banks’ Brexit plans said “hun­dreds” of ad­di­tional bank­ing jobs could shift without progress, on top of moves al­ready an­nounced. “The EU and in par­tic­u­lar the French are push­ing a hard line and have more lever­age in this area than ex­pected,” the source said. The Bank of Eng­land warned last week against the bloc us­ing de­riv­a­tives as a Brexit bar­gain­ing tool, risk­ing fi­nan­cial sta­bil­ity. Un­der EU law, cross­bor­der de­riv­a­tives must move by Brexit on March 29. “If by the time we’re tuck­ing into our Christ­mas turkey an agree­ment hasn’t gone through the UK Par­lia­ment, the first thing banks will do on re­turn­ing to the of­fice on Jan 2 is ex­e­cute con­tin­gency plans,” said Si­mon Pule­ston Jones, head of Europe at the FIA.

Mr Pule­ston Jones said the big­gest im­pact would be on France’s BNP Paribas and Ger­many’s Deutsche Bank.

How­ever, he played down po­ten­tial re­lo­ca­tions to up to 10 per bank, say­ing “more than one Eu­ro­pean bank” had said they would rather shut their de­riv­a­tives op­er­a­tions than re­lo­cate to an “un­prof­itable” EU lo­ca­tion.

Si­mon Pule­ston Jones, of the FIA, said the big­gest im­pact would be on BNP Paribas and Deutsche Bank

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