ECB tightens grip on back-to-back booking models

Supervisor could impose large exposures limit for intragroup trades, even if UK granted equivalence

European Central Bank

The European Central Bank could soon take on new powers to clamp down on the use of back-to-back booking to transfer market risk generated in continental Europe to trading hubs in the UK.

Proposed revisions to the ECB’s ‘options and discretions policies’ would allow its supervisory arm, the Single Supervisory Mechanism (SSM), to reject applications to exclude intragroup trades with entities outside the European Union from a bank’s large exposures limit. The move is widely seen as an effort to

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