The “Dear CEO” letter underlines the FCA’s open and pragmatic approach in the context of Brexit.
The FCA has published a “Dear CEO” letter to firms, advising them of its position in relation to the use of cross-border booking models in the context of Brexit. Firms commonly use remote and back-to-back booking models, but these arrangements have come under closer scrutiny recently as firms prepare their businesses for Brexit.
European supervisors have cautioned against the use of such models, and warned against firms potentially seeking to set up “empty shell” companies in the EU. For example, the European Central Bank (ECB) (which carries out a supervisory role in relation to Eurozone banks) has set out fairly detailed expectations for banks wishing to relocate to the Eurozone. In particular, the ECB expects that EU products and transactions with EU clients are booked in the EU, and that risk management capabilities related to such products are located in the EU.