The chief executive of the London Stock Exchange has warned of the systemic risk of Brexit.
Speaking to the Treasury Select Committee this morning, Xavier Rolet, also warned of large-scale jobs disappearing if the clearing of euro-denominated securities left London.
He said: “There is no doubt that an economic impact in terms of the jobs that power this industry and I am not just talking about the clearing jobs themselves, which number into the few thousands, but the very large array of ancillary functions, whether it is syndications, trading, treasury management, middle office, back office, risk management, software, which range into far more than just a few thousand or tens of thousands of jobs, would then start migrating.
“Last but not least we are talking here about the largest financial asset classes in the world.
“We are talking about numbers that are almost unimaginably large – hundreds of trillions – that would have to quickly be novated, migrated.
“The potential systemic impact not only would have reverberations if mishandled, if handled too quickly without the benefit of anticipation or preparation, and would have reverberations on a global basis.
“The systemic impact of handling this transition requires that you not wait until certainty is achieved if indeed it isn’t at the time of filing Article 50.”
Prime Minister Theresa May has committed to triggering Article 50 – the mechanism which will end Britain’s membership of the European Union – by the end of March.
This will begin the two-year Brexit negotiations at the end of which Britain will no longer be a member of the European Union.
Ms May has indicated Britain will be leaving the single market, saying she is not interested in trying to “keep bits of membership” of the EU, but she has not explicitly said this.
Douglas Flint, chairman of HSBC, appeared alongside Mr Rolet to give evidence this morning and warned of the potential impact of leaving the EU – particularly if there was no agreement after the two-year period.
He said: “I think the impact would start to be seen far before the end of the A50 process because there would be a period of time necessary to adjust our service propositions to ensure that as at the end of A50 we had the capacity and capability to continue to deliver seamlessly that which we give to customers today at that point in time.
“We would take pre-emptive action in order to ensure we had the capacity in place in order to continue to deliver what we deliver today through a different set of arrangements.”
He said that the loss of passporting rights by leaving the single market would mean 1,000 jobs could be moved to Paris.
