One of the immediate results of Brexit has been a huge increase in volatility in the financial markets including the foreign exchange and equities markets. The ongoing uncertainty will mean this volatility is sure to continue for the foreseeable future.
In relation to FX it will affect not just sterling but also the euro, dollar and other major currencies. In our experience, one effect of high FX volatility will be a rise in the number of businesses suffering major losses triggered by larger than expected FX movements. These losses are often caused by companies having been mis-sold complex FX derivatives by banks or brokers.
We have a great deal of experience of acting for clients who need to hedge their FX requirements but who have been persuaded to enter into extremely complex FX derivative contracts without being made aware of the potential serious losses which may arise. We are able to assist clients who find themselves in this situation and to advise on making FX derivative mis-selling claims against banks and brokers. Click here for further information on FX mis-selling claims.
Investors and businesses holding other derivatives contracts referencing equities, interest rates, commodities and credit markets will also be affected including in relation to margin/collateral calls and valuation of positions to be closed out where the parties rights and obligations are not always clear where there is market turmoil.
The International Swaps and Derivatives Association (ISDA) has published guidelines on the impact of Brexit for derivatives contracts and we will be monitoring developments in this area, and in other aspects of the financial services industry, closely and providing updates and guidance on our website.