GlobalbankbookingmodelsMakingasuccessofstructuralreformExecutivesummary2Bookingmodelsandbankstructures5Throughthesupervisor’seyes5Resolvability7Ring-fencing8Businessneeds–efficiencyandsimplicity9Conclusion12Appendix–otherregulatoryconsiderations14Theprudentialframework14Derivativesregulation15Marketaccess15Contacts16ContentsExecutivesummaryThispaperisrelevanttoboardsandseniormanagementteams,inparticularChiefFinancialOfficersandChiefRiskOfficers,ofglobalbankinggroupswithsignificanttradingbusinesses.Itconcernsthemodelstheyadoptforbookingtransactions(“bookingmodels”)andhowsupervisorydevelopmentswillaffectthem.Somedevelopments(suchasresolutionplanning)arecommontoallbankinggroupsandwillhaveanindirectimpactonbookingmodels.Others,suchasgreatersupervisoryscrutinyofback-to-backtradesorremotebooking,willhaveamoredirectimpact.Itisessentialthatanyanalysisofaglobalbankinggroup’sstrategyorbusinessmodeltakesaccountofthecombinedeffectofregulationonbookingmodels,giventheimplicationsfortheeconomicsofcertainactivitiesandthecostbaseofthegroup.2Internationalbankingisundergoingprofoundchange,asbankinggroupscomplywithnewregulatoryrequirementsandsupervisoryexpectations,overhaulingbusinessmodelsandtransforminghowtheyoperate.Atthecentreofthisarebookingmodels,whichsetouthowandwherebankinggroupstransactandhowtheresultingrisksaremanaged.Bookingmodelsareincreasinglyunderscrutiny,withregulationandsupervisionreplacingotherfactors(suchasoptimisationofmarketriskmanagement)asthekeydriverofcross-borderpractices.Structuralreformregulations–principallyring-fencingrequirementsandresolvabilityexpectations–arepushingbankinggroupstosimplifytheirlegalentitystructuresandtoreducethecomplexityoftheiroperations,includingtheirintra-groupfinancialarrangements.Bankinggroupsareincreasinglyhavingtotakealocallegalentity-focusedapproach,whichtypicallydoesnotalignwiththeorganisationofbusinesslines,andmaybeatoddswithglobalefficiency.Enhancedexpectationsaboutgovernanceandriskmanagementcapabilitiesareacceleratin...
