Insights Blog

The Central Bank published its Securities Markets Risk Outlook Report for 2022 this morning, setting out what it sees as the key conduct risks for securities markets in 2022.

The Central Bank’s new strategy (launched in November 2021 for its 2022-2024 Strategic Cycle (see our briefing on that strategy here)) was formulated against the backdrop of what the Central Bank sees as the key drivers of change in the financial system (the pace of technological innovation, the need to mitigate the long-term impacts of climate change, geo-political change, the long-term consequences of the COVID-19 pandemic, and the need to address risks relating to money laundering, financial crime and cyber security). Today’s report builds on many of those themes in the context of securities markets, with particular emphasis placed on the pace of technological developments, climate change, and changing investor behaviour.

Today’s report is wide-ranging. The key aspects of relevance for funds and fund management companies specifically will be covered in a separate briefing by our Asset Management and Investment Funds Group. The key points of relevance across the debt capital markets, financial regulation, and banking and finance sectors more generally are set out below.


Market abuse is the Central Bank’s key focus from the perspective of misconduct risk. It figured prominently in the 2021 Report (see our briefings here and here) and this led to industry correspondence and the imposition of specific risk mitigation programmes on certain market participants in mid-2021. For 2022, the Central Bank has asked issuers and regulated financial service providers (RFSPs) to review their compliance with the Market Abuse Regulation (MAR). Inconsistent approaches to Suspicious Transaction and Order Reports as between issuers and trading venues has triggered concerns. The importance of compliance with MAR obligations regarding insider lists, and the importance of informative and timely management information on trade surveillance, are emphasised in today’s report.


Addressing climate change has been moving up the Central Bank’s supervisory agenda for some time, and has become one of its strategic priorities. This was emphasised by Central Bank Governor Gabriel Makhlouf in November 2021 in the Central Bank’s letter to the Chairs and CEOs of RFSPs that coincided with COP26. For further information on that letter, read our briefing here.

Against the backdrop of the responsibility on RFSPs to avoid ‘greenwashing’ and the implementation of the Sustainable Finance Disclosure Regulation, the Central Bank expects RFSPs to have regard to the supervisory expectations set out in that letter.


Well-governed securities markets, and robust governance of RFSPs, continue to be a central theme of the Central Bank’s industry engagement. The Central Bank expects Board accountability, clear organisational structures, and clear allocations of responsibility for decision-making across RFSPs. It expects all RFSPs to have regard to its new Cross-Industry Guidance on Outsourcing (for more information on that guidance, read our briefing here).

Interestingly, the Central Bank included a case study on governance in the context of IBOR transition in today’s report, noting that governance and documentation issues were identified in targeted risk assessments carried out by it on certain banks and international investment firms in 2021. While the Central Bank said very little publicly on IBOR transition last year, preparation for that transition and the management of related risks was a particular focus area behind the scenes for many firms.


Retail investing increased over the course of the COVID-19 pandemic, and the Central Bank places particular emphasis on Special Purpose Acquisition Companies (SPACs) and crypto-assets in today’s Report. It reiterated ESMA’s public statement on its investor protection concerns in respect of SPACs, and reminded RFSPs that it has limited investments in SPACs to a maximum of 10% of the net asset value for retail investment funds.

There has been a boom in crypto-asset investing over the last 12-18 months or so, and it is no surprise to see the Central Bank highlight (again) the speculative and unregulated nature of crypto-assets. The virtual asset service provider (VASP) regime introduced in 2021 (see our briefing here) did bring some crypto-service providers within the scope of regulation, but it is notable that the Central Bank’s register of VASPs is currently empty as the Central Bank has not registered a single VASP yet.


The Central Bank will continue to focus on data quality in 2022, and RFSPs should expect increased supervisory engagement on this issue. A focus on data quality – and indeed the clarity and quality of all communications with the Central Bank – has been a persistent supervision theme for some time.

The dangers posed by inadequate risk mitigation frameworks in a time of increasing levels of cyberattacks was emphasised by the Central Bank, which expects RFSPs to understand and mitigate the IT risks specific to their firms, underpinned by risk analysis programmes, disaster recovery procedures and reliance automated systems. The Central Bank’s expectations in the areas of IT and cybersecurity, and operational resilience, are set out in its 2016 Cross Industry Guidance in respect of Information Technology and Cybersecurity risks, and in its December 2021 Cross Industry Guidance on Operational Resilience (read more about the latter in our recent briefing: Central Bank sharpens focus on operational resilience).


The Central Bank indicated that, in 2022, it will carry out “a number of full conduct risk assessments … while continuing to develop and enhance our supervisory approach to market abuse risks” – it is clear that MAR will continue to be at the top of the supervisory agenda for RFSPs and issuers operating in the Irish securities market in 2022. 

As the number of Irish firms operating in the global and European financial markets continues to grow and these firms become larger and more complex, we can expect the Central Bank to focus more and more on securities market regulation and to intensify the supervision of firms operating in this area.

To discuss how your business can best address the Central Bank’s expectations in 2022, please get in touch with your usual contact in our Financial Regulation, Debt Capital Markets and Banking and Finance teams.