And we are not prescriptive of types of booking arrangement that firms may operate. We do not for example prescribe a certain percentage of risk to be managed locally. Our goal here continues to be to ensure that firms’ manage appropriately the risks that they originate, receive and transfer out of the UK entities. To do that their booking models need to be transparent – to both regulators and firm management – so that they are capable of being understood and followed. And there then should be adequate pre-trade and post trade systems and controls in place to ensure that intended booking arrangements are followed. In practice, this means the international bank should have an appropriate local risk management capability. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  We also make it clear that there should be a Senior Management Function allocated responsibility for ensuring that there are appropriate controls in place to manage its booking arrangements, including remote booking. Where our expected standards are met, firms enjoy greater flexibility as to how they operate their booking, including highly integrated trading operations with the group. However, where they are not met, the PRA may require more local risk management or limit the degree of connectivity that the firm has with the rest of the group so that less risk is brought into, or transferred out, of the UK. This is a good example of where firms can self-assess against standards.

Supervisory Cooperation  To support responsible openness to international wholesale banking, be it as branches or subsidiaries, and to meet our objectives on safety and soundness and financial stability, we need confidence that: a. the Home State Supervisory regime delivers outcomes which are sufficiently equivalent to the UK regime; b. there is effective supervisory cooperation; and c.  3 4  there is assurance over the home state resolution framework. https://www.bankofengland.co.uk/speech/2020/sam-woods-city-banquet https://www.bankofengland.co.uk/financial-stability-report/2020/december-2020 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  The first and last points concern in large part the legislative framework, rules and powers of intervention that home states and authorities have. The better the outcomes they deliver, so the more reliance we can place on risks arising from overseas operations being manageable. The second point is about how those powers are applied, the practices, and openness of overseas authorities that wield them. It is on this point that I want to focus as a supervisor. Cooperation with Home State Supervisors  For both branches and subsidiaries, the PRA places reliance on cooperating closely with the Home State Supervisor, for branches this is particularly the case for prudential requirements, because a branch is not a separate legal entity. But for both there needs to be effective regulatory and supervisory cooperation if openness is to be ‘responsible’. We have a long history of working very effectively with a range of supervisory authorities, including the US, EU, Switzerland, Japan, and many others.