![\"London\"](\"https:\/\/english.thesunrisetoday.com\/wp-content\/uploads\/2014\/05\/London.jpg\")
EU regulators urged banks, investors and customers on Thursday to take \u201ctimely action\u201d to avoid disruption to cross-border derivatives and insurance contracts caused by Brexit.\nBritain leaves the EU in March 2019 and a \u201cstandstill\u201d transition deal until the end of 2020 agreed last month won\u2019t be formally ratified until October or later.
\n\u201cContingency planning should consider timely responses to all potential challenges, such as contract continuity and possible relocations,\u201d said a joint report from the EU\u2019s banking, insurance and markets regulators on risks to the financial system.
\nIn the short term, Brexit may affect the access of EU households and companies to financial services provided in Britain and may affect market confidence, it added.
\nBritish regulators have said that last month\u2019s transition deal means that EU banks with branches in London don\u2019t have to rush to apply for new UK licenses by March next year.
\nThe BoE wants EU regulators to reciprocate regarding British lenders with customers in the EU, to avoid hasty relocations that could damage the City.
\nThursday\u2019s report said banks, insurers, asset managers and market infrastructure firms in Britain should instead press ahead with applying for licenses before next March to avoid their customers being cut off from services like clearing.
\n\u201cBy the time legal certainty on a potential transition period may be attained, financial institutions would not have sufficient time to take necessary measures,\u201d the report said.
\nRelatively few firms have begun relocating staff and operations to the EU, but \u201cincreased relocation activity\u201d can be expected nearer to next March, it said.
\nThe Bank of England has said that financial firms on their own can\u2019t tackle contract continuity involving millions of customers in time, but the EU report appears to put the onus on private sector action.
\n\u201cFinancial institutions are responsible for ensuring that they are able to fulfil their contractual obligations under all circumstances, not least with respect to derivatives, liquidity provision, and swap contracts EU 27 parties have entered into,\u201d it said.
\nInsurance undertakings are also \u201cadvised to have in place contingency plans considering all the eventualities,\u201d it said.
\nThe report noted that derivatives exposures of EU banks to Britain fell from about \u20ac800 billion in June 2016, when Britain voted to leave the EU, to about \u20ac500 billion by September last year.
\nSome of the drop is caused by the pound\u2019s decline in value against the euro.
\nThe overall investment exposure of insurers from the European Economic Area to Britain is just 2.13 percent, but some insurance companies may be more substantially exposed, the report said.<\/p>\n