(Adds more detail)
By Huw Jones and David Milliken
LONDON, Oct 8 (Reuters) - 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.
(Reporting by David Milliken and Huw Jones, Editing by Andy
Bruce and Catherine Evans)