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Report: ECB sets 2022 deadline to limit post-Brexit back-to-back trading


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Report: ECB sets 2022 deadline to limit post-Brexit back-to-back trading

The ECB has informed financial institutions that they will have to limit back-to-back booking by 2022, the Financial Times reported.

Once the U.K. leaves the EU, banks would have three years to phase out this mode of trading, sources told the newspaper, citing a letter from the ECB.

Another source said bank staff had been asked to limit back-to-back booking, which allows trades to be processed in the EU while being booked in the U.K, much sooner.

In the last few weeks, the ECB has been stricter about back-to-back trading, and wants banks "to tell them exactly what our two-year plan looks like in terms of capital, liquidity, people, risk management and compliance," another source said.

Currently, the ECB does not regulate "investment firms" through which banks carry out their trading business, the FT reported Oct. 7.

Recently, European Banking Authority chair Andrea Enria called the booking mode an indispensable "backbone" of global finance that would not be banned after Brexit.

However, the ECB, earlier in 2018, warned that banks should "not rely only on intragroup back-to-back hedging strategies or remote booking with group entities in third countries."