LONDON Britain's top markets regulator will clamp down on any attempt post-Brexit to return to the "bad old world" of opaque transactions in which banks did not know where trades were being booked, he said on Tuesday.
Banks based in London want to maintain broker links with customers across the European Union once Britain has left the bloc in 2019, such as by opening trading offshoots in EU countries.
But to limit costs, some dealers want the processing of securities and derivatives trades at such units to be still handled centrally at hubs in London, a step regulators fear could muddy electronic trails for trades.
Andrew Bailey, chief executive of the Financial Conduct Authority, said there is a "potential world" in which trading arms seek to move the minimum amount of activity that would satisfy a regulator, while still keeping the UK "hub" intact.
The European Central Bank, which authorises lenders in the EU's single currency area, has already warned banks they will not get a licence if they push for such deals.
Bailey told reporters the FCA was likewise focused on making "opportunistic" transaction booking models transparent and backed by sound risk management.
"We do not want to go back to the bad old world. The bad old world was part of the crisis story, of opaque booking models, firms themselves actually really did not know where stuff was being booked," Bailey said.
"There are standards that you can expect of firms. You cannot have opaque, opportunistic booking models... We're not going to compromise on that."
The EU's securities watchdog announced last week it would issue guidance and possible curbs to stop a "race to the bottom" among national watchdogs in the EU to lure banking business from London because of Brexit.
(Reporting by Huw Jones, editing by Pritha Sarkar)