On 21 January 2020 the Central Bank of Ireland (CBI) issued an industry communication (Dear CEO Letter) in relation to securities market conduct risk, in which it provides an overview of the key findings from the CBI’s 2019 market conduct supervisory work. This latest Dear CEO Letter follows a similar industry communication in March 2019, in which the CBI set out its expectation for regulated entities to demonstrate and evidence their market conduct risk identification processes. During 2019 the CBI engaged with 24 regulated entities and carried out on-site inspections of 10 regulated entities and visited branches of Irish entities in other jurisdictions.
The CBI found that instances in which entities may not have been adequately identifying the market conduct risk affecting their business and consequently not mitigating or managing the risk. The CBI also identified a number of issues in relation to:
- inadequate market conduct risk framework;
- inadequate governance of market conduct risk; and
- failure to identify the risk of market abuse.
During 2020 the CBI will focus on regulated entities’ ability to identify market conduct risk, how they are governed to control wholesale market conduct risk, and how conduct-specific information is communicated across regulated entities and groups. The CBI will be examining the compliance of regulated entities and issuers to recognise and manage inside information and where relevant identify and report suspicious orders and transactions.
See link to the latest Dear CEO Letter: https://www.centralbank.ie/docs/default-source/regulation/industry-market-sectors/securities-markets/wholesale-markets/securities-market-conduct-risk—dear-ceo-letter.pdf?sfvrsn=5
For local or cross-border advice in relation to the matters referred to in the CBI’s letter, and/or the regulation of securities markets more generally, please do not hesitate to get in touch with the authors or your usual DLA Piper contact.