LONDON (Reuters) - Britain and the European Union need an agreement to allow cross-border financial contracts to run beyond Brexit and avoid disrupting markets, two banking lobby groups said on Friday.
The legal status of cross-border contracts written by UK-based financial firms is unclear once they no longer come under EU rules from March 2019, UK Finance and the Association for Financial Markets in Europe (AFME) said in a joint paper.
"It is estimated that 1.3 trillion euros ($1.57 trillion) of UK-based bank assets are related to the cross-border provision of financial products and services – many of which support EU exporting businesses that are key drivers of growth," AFME Chief Executive Simon Lewis said.
"Early action to clarify that these contracts will continue following Brexit is therefore critical."
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Action could include legally-binding "grandfathering", or allowing existing contracts to run to maturity without change, the paper said.
Authorities have taken similar steps in the past when they agreed "continuity" measures to introduce the euro and new EU rules on derivatives, it added. Taking no action would mean huge costs to restructure businesses or transfer contracts to other entities.
The Bank of England is already examining what can be done to mitigate the impact of Brexit on cross-border insurance contracts.
(Reporting by Huw Jones; Editing by Kevin Liffey)