Britain's access to the EU in financial services is being dealt with by Brussels separately from stalled negotiations that increasingly point to a no-deal Brexit on Dec. 31.

The EU has said that banks in the bloc must trade euro-denominated shares and a welter of derivatives inside the bloc from January.

"Some business, as a result of that, will need to transfer. The question is, is the market ready, have people made the right preparations for that," Bank of England Deputy Governor Jon Cunliffe told reporters.

"There may be some who are unprepared and in many cases there are other routes for them, but it's impossible to know unless and until we get there exactly what the impact will be," Cunliffe said.

Share-trading platforms in London have opened units in the bloc to trade euro-denominated shares, but banks warned on Thursday that disruption in derivatives was inevitable unless the EU granted market access to Britain before January.

Around $200 billion of daily trading in interest rate swaps in London, or roughly a sixth of the total, will be affected by "obligations" on where trading can take place, the BoE said.

Britain, however, has so far refused to soften its own obligation on UK-regulated banks to use derivatives platforms in London, making trades between UK and EU counterparties impossible.

But Bailey said the BoE has spent a lot of time mitigating potential disruption and avoiding market "roadblocks", without matching action from Brussels.

The BoE's full "armoury" will be at hand to deal with any market disruption in January, Bailey said.

The EU's financial services chief said this week the bloc needed to cut its reliance on the City of London.

"London is a global financial centre, has been for a very, very long time, and will continue to be so," Bailey said.

(Reporting by Huw Jones, editing by Larry King)

By Huw Jones