The City faces a further wave of departures and “very volatile markets” if the UK fails to strike a deal on regulation of £41 trillion worth of derivative deals, experts have warned. The world’s largest trade body for derivatives traders, the Washington-based Futures Industry Association (FIA), told The Sunday Telegraph its members faced unprecedented disruption without progress before Christmas. A senior Brussels source briefed on European banks’ Brexit plans said “hundreds” of additional banking jobs could shift without progress, on top of moves already announced. “The EU and in particular the French are pushing a hard line and have more leverage in this area than expected,” the source said. The Bank of England warned last week against the bloc using derivatives as a Brexit bargaining tool, risking financial stability. Under EU law, cross-border derivatives must move by Brexit on March 29. “If by the time we’re tucking into our Christmas turkey an agreement hasn’t gone through the UK Parliament, the first thing banks will do on returning to the office on Jan 2 is execute contingency plans,” said Simon Puleston Jones, head of Europe at the FIA. Mr Puleston Jones said the biggest impact would be on France’s BNP Paribas and Germany’s Deutsche Bank. However, he played down potential relocations to up to 10 per bank, saying “more than one European bank” had said they would rather shut their derivatives operations than relocate to an “unprofitable” EU location.