Britain's full exit from the European Union could be bumpy for investors as banks staff new hubs in the bloc, but there are few threats to wider financial stability, the Bank of England said on Thursday.
Britain left the EU in January and full access to the single market under transition arrangements expires on Dec. 31, with future access for financial services largely to be decided.
The BoE's Financial Policy Committee said that most risks to stability that could arise from disruption to cross-border business after December have now been mitigated.
"Some market volatility and disruption to financial services, particularly to EU-based clients, could arise," the FPC said.
Brussels has granted market access for UK clearing houses from January, though only for 18 months.
There are currently 59 trillion pounds of derivative contracts between UK clearers and their members in the bloc, 48 trillion pounds of which is due to expire after December, the FPC said.
Banks and insurers that have used London as an EU gateway have set up new or expanded existing hubs in the bloc.
"Financial institutions were continuing to make preparations and engage with clients and customers to minimise any disruption and it was important that they continue to do so," the FPC said.
On average, over two-thirds of clients of UK-based banks have now completed the necessary documentation to enter into derivative trades with the EU entities, the FPC said.
Insurance companies in Britain have restructured their business in order to service the vast majority of their 60 billion pounds of EU liabilities, it said.
"The number of clients actively trading in the new entities is materially lower. Some operational risks therefore remain, including if many clients seek to migrate to the EU entities in a short period of time," the FPC said.
A rush to shift assets and staff to new EU hubs could "amplify market volatility", it said.
The article originally appeared on Reuters