ESMA Guidelines and Recommendations

Volatility spikes underline fragilities and risks to EU securities markets and investors

ESMA Guidelines and Recommendations

Date: 14 September 2018

On 6th September 2018, the European Securities and Markets Authority (ESMA) said in its latest Trends, Risks, and Vulnerabilities (TRV) Report (No 2, 2018) that European Union (EU) securities markets, infrastructures and investors face new risks in the form of high volatility,  ESMA also re-iterated its concerns about cyber risk and Brexit risks for business operations.

The TRV, which covers the first half of 2018, finds that overall risk levels for the EU’s securities markets remained stable but at high levels for most risk categories. Equity and bond volatility spikes in February and May reflected the growing sensitivities. ESMA also sees a deterioration in outstanding corporate debt ratings, and in corporate and sovereign bond liquidity.

Next steps

The TRV is published biannually, and examines the performance of securities markets, assessing both trends and risks in order to develop a comprehensive picture of systemic and macro-prudential risks in the EU, to assist both national and EU bodies in their risk assessments.  ESMA also updates its Risk Dashboard every quarter.

ESMA’s TRV contributes to promoting financial stability and enhancing consumer protection by regularly looking into cross-border and cross-sector trends, risks and vulnerabilities, both at the wholesale and retail level.