February 27, 2019
LONDON (Reuters) – Preparations made so far are no guarantee markets won’t be disrupted if there is a no-deal Brexit, Britain’s Financial Conduct Authority said on Wednesday.
FCA Chief Executive Andrew Bailey told a House of Lords committee that he could give no assurance there would not be market disruption if Britain crashes out of the European Union next month with no transition deal.
Britain is due to leave the EU on March 29 but has no agreement with Brussels that would include a business-as-usual transition agreement.
Britain and the EU have taken steps to avert dislocation in markets, but Bailey said work remained to be done to mitigate risks from uncleared cross-border derivatives and exchange of data.
But unlike Britain, Brussels has decided there is no need for EU-wide action on uncleared derivatives, leaving it to individual states to take measures, which some have.
“Those measures are not the same. Some are more robust than others … It’s helpful in term of reducing the cliff edge,” Bailey told a House of Lords committee on EU affairs.
Brussels was unwilling to go as far as Britain in taking steps to avoid disruption to markets from any hard Brexit partly because it wanted to see a transfer of financial services activity from Britain to the continent, he added.
A hard Brexit also risk disrupts the flow of data between financial firms in Britain and the EU, he said.
The FCA has told financial-services firms in the past 24 hours they need to put in place contingency measures, such as clauses in contracts, as a workaround to avoid disruption in data flows, Bailey said.
(Reporting by Huw Jones; editing by Larry King)