The U.K. and U.S. sought to allay fears of disruption in themulti-trillion-dollar derivatives market, vowing to put in placeemergency policies to ensure trading continues uninterrupted in theevent of a no-deal Brexit.

The heads of the Bank of England (BOE), Financial ConductAuthority (FCA), and U.S. Commodity Futures Trading Commission(CFTC) promised a seamless transition after the U.K. leaves theEuropean Union (EU), whatever form the separation takes. Theagencies' moves would help traders use many key exchanges andclearinghouses, including those run by the London Stock ExchangeGroup Plc., CME Group Inc., and Intercontinental Exchange Inc.

The authorities said they would carry over existing agreementsstruck between the EU and the U.S. because those will no longercover the U.K.'s relationship with America post-Brexit. Without anarrangement in place, trillions of dollars in swaps, futures, andother derivatives could be thrown into question at the world'sbiggest banks and money managers.

“As host of some of the world's largest and most sophisticatedderivative markets, the U.S. and U.K. have special responsibilitiesto keep their markets resilient, efficient, and open,” Mark Carney,governor of the BOE, said in a statement on Monday.

CFTC Chairman Christopher Giancarlo told reporters that “Londonis, and London will remain, a key global center for derivativestrading and clearing for a long time to come.” What the U.K.capital does for trading and clearing “cannot be readily replicatedin any other financial center.”

With about a month before the U.K. leaves, the risks of ano-deal Brexit are looming large as U.K. Prime Minister Theresa Maystruggles to win concessions from the EU that will help her get thewithdrawal deal through Parliament. The prospect of the U.K.crashing out is forcing authorities in the 27 remaining EU memberstates to hurry up and enact last-minute legislation to preventruptures in trade, immigration and investment.

See also:

• Brexit Financial-Market Threat
• EU Plans One-Year Derivatives Fix to Prevent BrexitRupture
• Companies Triggering Brexit Alarms

EU-wide authorities and the U.K., meanwhile, have taken steps toguard against a rupture in the derivatives-clearing industry inEurope. The financial industry is asking Brussels for additionalhelp to allow EU money managers to trade blue-chip stocks onLondon-based exchanges.

Subsidiaries of Bloomberg LP, the parent of Bloomberg News,operate a swap-execution facility and a multilateral tradingfacility.

The regulators said they are taking the following steps tosupport the derivatives market:

• The BOE, FCA, and CFTC are updating supervisory co-operationagreements
• CFTC intends that existing regulatory relief granted by theU.S. to EU firms will be extended to U.K. firms at the point of theU.K.'s withdrawal
• U.K. authorities have confirmed that U.S. trading venues,firms, and clearinghouses will continue to be able to provideservices in the U.K.

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