Central banks should be ready to inject cash into the financial markets to keep them stable after Britain leaves the European Union in 2019, a draft report from a bank industry lobby said.
The Association for Financial Markets in Europe (AFME), in a draft report seen by Reuters, said that regulators, central banks and national governments should continue to support financial market stability between Britain's departure from the EU and start of new trading terms.
"This may require particular attention during the uncertain period around Brexit, and in particular during the transition, and may involve more regular market communications and targeted support in case of market need, for example, access to liquidity schemes," the report said.
This and other steps would be needed to minimise disruption, it said.
AFME's report also provides a blueprint for a transition phase after Britain's EU exit in March 2019. This would include a "bridging phase" to avoid "short-term disruption" until new trading terms are ratified and an "adaptation phase" for moving to the new terms.
The report did not specify a time frame for the transition but said it should be limited.
"It is crucial that clarity is provided as soon as possible on a transitional period, and ideally before the end of this year," AFME said.
AFME wants existing market arrangements maintained throughout the transitional period, reflecting worries among bankers that they might have to comply first with a transition period and then the new trading terms.
"This means that existing legislation, regulation, permissions and authorisations should continue to be effective during the transitional period," it said.
Company bosses also want Britain to negotiate a staggered departure from the EU by the end of this year or they will have to push ahead with plans that assume they will lose all access to the single market after March 2019.
Senior executives are calling on Britain to choose an existing model for trading with the EU during any transitional phase because negotiating a new arrangement could prove as difficult as the final terms.
Britain could either keep its existing trading arrangements, or copy Norway, which pays hundreds of millions of euros to access the European internal markets from outside the bloc.
"The government needs to keep things as simple as possible or we going to end up digging ourselves into a deeper hole than we are already in," one executive said.
Britain's financial services sector has already called for the country's new trading terms for banks, insurers and funds to be based on a system of "mutual recognition", whereby Britain and the EU accept each other's financial rules.
Michel Barnier, the EU's Brexit negotiator, said this week that it would be "impossible" for the bloc to automatically accept UK rules.