Derivatives trade body ISDA has described the vote for the UK to leave the EU as a “momentous decision” which will have significant implications for financial markets.

Ahead of the vote ISDA conducted analysis on the contractual implications of Brexit, highlighting a number of potential issues that counterparties will need to consider during the two-year negotiation period.

These included collateral, bank resolution and insolvency issues as well as the choice of English law as the law governing the ISDA Master Agreement.

Now the UK has voted to leave, ISDA says it will form working groups and hold a series of industry calls to ensure derivatives market participants are prepared.

London is the leading FX and OTC derivatives hub. Swaps, options and futures are used by investors to hedge their portfolios against swings in currencies, interest rates and commodity prices.

ISDA's main task is to ensure the derivatives market functions safely and efficiently. It has 850 member institutions from 67 countries.

 “It is important to stress that the UK vote to leave the EU will not have an immediate impact on the legal certainty of existing derivatives contracts, nor will it require any immediate contractual change or action from counterparties,” ISDA said in a statement.

“Once the UK government serves formal notice of its intention to withdraw, the UK will continue to remain a member of the EU for at least two years. During that time, existing European treaties, directives and regulations will remain in force.”

A webinar call for ISDA members to discuss the implications of Brexit is planned for Wednesday afternoon.