London: There has been no fundamental slowdown in markets so far because of Britain`s decision to leave the European Union, top officials from the financial services sector said on Wednesday.
Banks are making contingency plans to move some of their operations to continental Europe if Britain does not negotiate access to the bloc`s single market after Brexit.
"I don`t think there has been a fundamental chilling effect," Alex Wilmot-Sitwell, president for Europe at Bank of America Merrill Lynch told the EU affairs financial sub-committee.
"So far there hasn`t been a dramatic impact on activity," Douglas Flint, group chairman of HSBC, told the House of Lords committee.
Banks in Britain depend on an EU "passport" to serve clients across the 28-country bloc from one base and lenders worry that these passporting rights will end after Britian leaves the EU.
Flint said financial stability could be undermined if "you start playing" with a range of activities that can be conducted from a single location.
The financial sector was not a "Lego set", where you can pull up and move pieces anywhere without affecting clients and financial stability, Wilmot-Sitwell said.
Elizabeth Corley, vice chair of Allianz Global Investors, said there was some caution in the sector in deploying free cash flow.
Anecdotally, there was some hesitation to commit to capital expenditure, Corley added.
All three spoke of London`s advantage of being able to offer a broad and deep range of financial services from one hub, saving complexity and cost for customers across Europe and beyond.
Tinkering with London`s financial "eco-system" could also raise risks for financial stability and undermine new rules regulators have put in place since the 2007-09 financial crisis, Flint said.
"Dismantling that seems to be counter-intuitive to what we have done in last 8 years post-crisis," Flint said.
London accounts for 69 percent, or $928 billion, of the off-exchange euro-denominated interest rate derivatives market and President Francois Hollande of France has said clearing in euro-denominated contracts should be moved to the euro zone.
Shifting euro clearing elsewhere would bump up costs by forcing banks and users to have multiple piles of cash to back trades, Flint said.
"I think it would be very bad for the ecosystem," Flint said.