FCA Letter on Post-Brexit Booking Arrangements

The U.K. Financial Conduct Authority (the “FCA”) has issued a “Dear CEO” letter on August 8, 2018, in which it makes clear that post-Brexit, the FCA is open to many different booking arrangements to be utilized by regulated U.K. investment firms for booking trades done with or on non-U.K. European firms.

We are open to a broad of legal entity structures or booking models. This includes those making use of back-to-back and remote booking, providing their associated conduct risks are effectively managed and controlled.

The letter goes on to set forth the criteria that will be applied.  Basically, however, the FCA is admitting that it is not yet ready to specify any approach and that it will be looking at risk to the U.K. customer.  Among other things, “Booking arrangements should not be an impediment to the firm’s recovery and  resolution.”  The level of risk, however, will depend in part on the agreement between the U.K. and the EU.