Financial Markets Regulatory Outlook 2022
New strategies for a changing world
Our annual assessment from Deloitte’s EMEA Centre for Regulatory Strategy explores how major regulatory trends will affect the financial services industry across EMEA in the year ahead, and how leaders can anticipate and respond to them effectively.
The 2022 edition of the Financial Markets Regulatory Outlook identifies ten cross-sector themes of strategic significance, and takes an in-depth look at three related spotlight topics - credit risk, regulatory divergence and the future of regulation.
We have also published our Financial Markets Interim Regulatory Outlook, which examines the major market developments since the publication of our RO22 in January, and considers their implications for financial services regulation and what this means for regulated firms.
Please use the tabs below to navigate between the two documents.
July 2022
Weathering the storms
Our Interim Regulatory Outlook 2022 (IRO22) examines the major market developments since the publication of our RO22 in January, and considers their implications for financial services regulation and what this means for regulated firms. Here we consider: Russia’s invasion of Ukraine and the resulting financial sanctions, the dramatic increase in inflationary pressure, the growing importance of energy security and how it interacts with the regulatory focus on sustainability, and the market volatility that we saw in March.
The IRO22 also analyses the most important regulatory trends that have emerged in the first half of the year, trends that are distinct from those discussed in the RO22. They include the slower pace with which a number of regulatory changes are being delivered, the growing importance of competitiveness in shaping the future of financial services regulation, and finally how supervisory approaches are continuing to evolve
Click on the boxes below to learn more about the key themes, or download the full report.
Russia’s invasion of Ukraine - Russia’s invasion of Ukraine has had, and will continue to have, a series of direct and indirect consequences for financial services firms. Firms have to adjust their operations, systems, assets and infrastructures to respond to sanctions, cyber threats and exposure to Russian and Belarusian markets and clients.
Balancing energy security with sustainability - Policymakers in the EU and the UK have to balance their net zero ambitions and the energy transformation of their economies with the disruption of oil and gas supplies due to Russia’s invasion of Ukraine. In some countries this is likely to mean that use of coal and nuclear power will increase in the short term. Firms will have to consider their appetite for financing this increase and its impact on their own net zero commitments.
Inflationary pressure - Inflation and the cost of living have increased markedly and are now well above policymakers’ targets. Central banks have begun to tighten monetary policy, increasing debt servicing costs for businesses and consumers, and creating second and third round effects for firms.
Market volatility - Commodity, equity markets and crypto markets have all faced significant market volatility. Regulators are increasingly concerned with participants’ ability to make payments, meet margin calls, and protect consumers.
Moving, fast and slow - As policymakers have had to deal with various fast-moving market developments, the UK and EU have both been slower to implement and progress important aspects of their regulatory reforms than we anticipated. However in others the pace has picked up.
Competing on competitiveness - Competitiveness concerns are becoming an important part of regulatory policy making. The UK’s regulators look set to gain a secondary competitiveness objective, whilst the EU is adapting its reforms to respond to the UK’s regulatory divergence. This approach may create tensions between governments and regulators.
Evolving supervisory expectations - Supervisory approaches are evolving. The FCA ambition is to embed a data-driven supervisory strategy and to take a more assertive approach. The ECB has concerns about banks’ booking models. The BoE’s climate stress tests have identified general weaknesses in firms’ capabilities and greenwashing has risen up the regulatory agenda.
Access our interactive timeline tool for a high-level view of recent and upcoming regulatory milestones for the financial services industry.
January 2022
New strategies for a changing world
Our annual assessment from Deloitte’s EMEA Centre for Regulatory Strategy explores how major regulatory trends will affect the financial services industry across EMEA in the year ahead, and how leaders can anticipate and respond to them effectively.
The 2022 edition of the Financial Markets Regulatory Outlook identifies ten cross-sector themes of strategic significance, and takes an in-depth look at three related spotlight topics - credit risk, regulatory divergence and the future of regulation.
Watch the video or click on the boxes below to learn more about the key themes, or download the full report.
Read our Interim Regulatory Outlook, our mid-year update that analyses important changes to the regulatory and economic outlook since the beginning of the year.
Transition to a sustainable economy - regulatory focus will turn to scrutinising transition plans that will deliver firms’ climate pledges. Regulators will continue to develop ESG disclosures and increase scrutiny of greenwashing and liability risk management.
Climate-related risk management - banks and insurers will need to deepen their climate-related risk management capabilities, including scenario analysis. Supervisory focus will broaden beyond climate to capture nature-related risk.
Innovation - regulators will focus on addressing risks stemming from digital and business model innovation. Cryptoassets and digital payment firms must prepare for more intrusive supervision of their risks and control frameworks.
Operational resilience - policy needs to be put into practice as firms implement regulatory requirements and address operational vulnerabilities. International firms need to look for synergies across multiple regulatory requirements to drive consistency and efficiency regarding compliance.
Revising the capital framework - regulators will make significant decisions in 2022 on the future of the prudential frameworks for banks and insurers. Firms need to prepare for diverging implementation of Basel 3.1 and Solvency II.
Market structure - regulatory reform is changing the structure of European capital markets. Firms need to prepare for revisions to MiFID/MiFIR and possible reform to Money Market Funds, and make progress on IPU implementation.
Value for money - firms will increasingly need to justify the value of their products and services as regulators focus on how much customers are paying and whether this is commensurate with the value being delivered.
Financial crime - regulatory patience with weaknesses in banks' AML/CTF processes is wearing thin and we expect more enforcement action. Scrutiny of digital payments and cryptoassets firms will intensify.
Governance - firms need to revisit their governance frameworks as they tackle the challenges of overseeing a more complex business environment and address heightened regulatory and social expectations in areas such as operational resilience, climate and diversity and inclusion.
They think it’s all over… it isn’t yet - as attention turns to tackling global issues such as climate change, firms must remain focused on ongoing regulatory initiatives - including LIBOR and resolvability - and address re-emerging concerns such as regulatory reporting.
July 2022
Weathering the storms
Our Interim Regulatory Outlook 2022 (IRO22) examines the major market developments since the publication of our RO22 in January, and considers their implications for financial services regulation and what this means for regulated firms. Here we consider: Russia’s invasion of Ukraine and the resulting financial sanctions, the dramatic increase in inflationary pressure, the growing importance of energy security and how it interacts with the regulatory focus on sustainability, and the market volatility that we saw in March.
The IRO22 also analyses the most important regulatory trends that have emerged in the first half of the year, trends that are distinct from those discussed in the RO22. They include the slower pace with which a number of regulatory changes are being delivered, the growing importance of competitiveness in shaping the future of financial services regulation, and finally how supervisory approaches are continuing to evolve
Click on the boxes below to learn more about the key themes, or download the full report.
Russia’s invasion of Ukraine - Russia’s invasion of Ukraine has had, and will continue to have, a series of direct and indirect consequences for financial services firms. Firms have to adjust their operations, systems, assets and infrastructures to respond to sanctions, cyber threats and exposure to Russian and Belarusian markets and clients.
Balancing energy security with sustainability - Policymakers in the EU and the UK have to balance their net zero ambitions and the energy transformation of their economies with the disruption of oil and gas supplies due to Russia’s invasion of Ukraine. In some countries this is likely to mean that use of coal and nuclear power will increase in the short term. Firms will have to consider their appetite for financing this increase and its impact on their own net zero commitments.
Inflationary pressure - Inflation and the cost of living have increased markedly and are now well above policymakers’ targets. Central banks have begun to tighten monetary policy, increasing debt servicing costs for businesses and consumers, and creating second and third round effects for firms.
Market volatility - Commodity, equity markets and crypto markets have all faced significant market volatility. Regulators are increasingly concerned with participants’ ability to make payments, meet margin calls, and protect consumers.
Moving, fast and slow - As policymakers have had to deal with various fast-moving market developments, the UK and EU have both been slower to implement and progress important aspects of their regulatory reforms than we anticipated. However in others the pace has picked up.
Competing on competitiveness - Competitiveness concerns are becoming an important part of regulatory policy making. The UK’s regulators look set to gain a secondary competitiveness objective, whilst the EU is adapting its reforms to respond to the UK’s regulatory divergence. This approach may create tensions between governments and regulators.
Evolving supervisory expectations - Supervisory approaches are evolving. The FCA ambition is to embed a data-driven supervisory strategy and to take a more assertive approach. The ECB has concerns about banks’ booking models. The BoE’s climate stress tests have identified general weaknesses in firms’ capabilities and greenwashing has risen up the regulatory agenda.
Access our interactive timeline tool for a high-level view of recent and upcoming regulatory milestones for the financial services industry.
January 2022
New strategies for a changing world
Our annual assessment from Deloitte’s EMEA Centre for Regulatory Strategy explores how major regulatory trends will affect the financial services industry across EMEA in the year ahead, and how leaders can anticipate and respond to them effectively.
The 2022 edition of the Financial Markets Regulatory Outlook identifies ten cross-sector themes of strategic significance, and takes an in-depth look at three related spotlight topics - credit risk, regulatory divergence and the future of regulation.
Watch the video or click on the boxes below to learn more about the key themes, or download the full report.
Read our Interim Regulatory Outlook, our mid-year update that analyses important changes to the regulatory and economic outlook since the beginning of the year.
Transition to a sustainable economy - regulatory focus will turn to scrutinising transition plans that will deliver firms’ climate pledges. Regulators will continue to develop ESG disclosures and increase scrutiny of greenwashing and liability risk management.
Climate-related risk management - banks and insurers will need to deepen their climate-related risk management capabilities, including scenario analysis. Supervisory focus will broaden beyond climate to capture nature-related risk.
Innovation - regulators will focus on addressing risks stemming from digital and business model innovation. Cryptoassets and digital payment firms must prepare for more intrusive supervision of their risks and control frameworks.
Operational resilience - policy needs to be put into practice as firms implement regulatory requirements and address operational vulnerabilities. International firms need to look for synergies across multiple regulatory requirements to drive consistency and efficiency regarding compliance.
Revising the capital framework - regulators will make significant decisions in 2022 on the future of the prudential frameworks for banks and insurers. Firms need to prepare for diverging implementation of Basel 3.1 and Solvency II.
Market structure - regulatory reform is changing the structure of European capital markets. Firms need to prepare for revisions to MiFID/MiFIR and possible reform to Money Market Funds, and make progress on IPU implementation.
Value for money - firms will increasingly need to justify the value of their products and services as regulators focus on how much customers are paying and whether this is commensurate with the value being delivered.
Financial crime - regulatory patience with weaknesses in banks' AML/CTF processes is wearing thin and we expect more enforcement action. Scrutiny of digital payments and cryptoassets firms will intensify.
Governance - firms need to revisit their governance frameworks as they tackle the challenges of overseeing a more complex business environment and address heightened regulatory and social expectations in areas such as operational resilience, climate and diversity and inclusion.
They think it’s all over… it isn’t yet - as attention turns to tackling global issues such as climate change, firms must remain focused on ongoing regulatory initiatives - including LIBOR and resolvability - and address re-emerging concerns such as regulatory reporting.
Download the reports
Download the Interim Regulatory Outlook 2022 - July 2022
Explore the major market developments since the publication of our RO22 and how these will affects firms and markets
Download the Regulatory Outlook 2022 - January 2022
Explore how major regulatory trends will affect the financial services industry across EMEA in 2022
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