Global Banks, City of London Raise “Disorderly Brexit” Alarm

Shifting trillions of euros of derivatives positions could be hugely disruptive.

The growing prospect of a hard or disorderly Brexit is sending jitters through the global financial community. This week the Financial Times reported that a group of “large financial institutions with big London operations” had met with US Commerce Secretary Wilbur Ross to express their dissatisfaction with the lack of progress in Brexit negotiations.

“The fears over a potential Brexit no-deal are rising, as we move within 16 months of the UK’s exit from the EU,” said Joshua Mahony, market analyst at IG.

While New York stands to benefit from some of the disruption caused by the UK’s separation from the EU, there is rising concern that Brexit could set off global ripples. That fear was compounded on Friday after Teresa May announced plans to set the UK’s departure date and time (March 29, 2019 at GMT 23:00) from the EU in law, warning she will not “tolerate” any attempt to block Brexit.

“[The banks] are becoming nervous,” said City of London Corporation’s policy chief Catherine McGuinness after meeting representatives of US banks earlier this week. “It wasn’t just curiosity, it was concern at the lack of progress that we have been making, and nervousness that it had implications beyond Europe’s borders in terms of causing disruption to markets.”

For the City of London Corporation, the prospect of a messy Brexit is even more terrifying than it is for many of the global banks it hosts within its coveted Square Mile…

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