ESMA Lists Securities Markets as High Risk in Q1 Risk Dashboard Update

Thursday, 07/06/2018 | 06:54 GMT by David Kimberley
  • The European regulator noted that Brexit and fluctuations in the equities markets contributed to heightened risk levels
ESMA Lists Securities Markets as High Risk in Q1 Risk Dashboard Update
Bloomberg

The European Securities and Markets Authority (ESMA) has released its updated risk dashboard for the first quarter of 2018. The European regulator continued to list the securities market as being at high risk.

ESMA has been releasing a risk dashboard since early 2013. The term ‘dashboard’ is in some ways misleading as, functionally, it is just a report that outlines ESMA’s views of the level of risk present in different markets.

Despite fears of American and Korean conflict and political upheaval in Italy over the past few months, ESMA noted that it considers Brexit to be the greatest source of political and event risk for its member states. It warned firms to integrate any risk exposure to Brexit into their Risk Management systems.

ICO warnings and binary bans

The European regulator also noted its ongoing concerns with regard to a number of investment products. Specifically, it stated that initial coin offerings (ICOs), binary options and contracts-for-differences (CFDs) posed high risks to investors.

The inclusion of the latter two products seems confusing. ESMA has already banned binary options trading and placed severe restrictions on the sale and trading of CFDs. It is difficult to see how binary options, in particular, can pose a risk given that no one can trade in them.

More understandably, ESMA stated that the equities market showed signs of heightened risk over the course of the first quarter of 2018. It noted that equities have seen significant price corrections in the past few months with a 6 percent reduction in EU stocks in just one week in February.

The European Securities and Markets Authority (ESMA) has released its updated risk dashboard for the first quarter of 2018. The European regulator continued to list the securities market as being at high risk.

ESMA has been releasing a risk dashboard since early 2013. The term ‘dashboard’ is in some ways misleading as, functionally, it is just a report that outlines ESMA’s views of the level of risk present in different markets.

Despite fears of American and Korean conflict and political upheaval in Italy over the past few months, ESMA noted that it considers Brexit to be the greatest source of political and event risk for its member states. It warned firms to integrate any risk exposure to Brexit into their Risk Management systems.

ICO warnings and binary bans

The European regulator also noted its ongoing concerns with regard to a number of investment products. Specifically, it stated that initial coin offerings (ICOs), binary options and contracts-for-differences (CFDs) posed high risks to investors.

The inclusion of the latter two products seems confusing. ESMA has already banned binary options trading and placed severe restrictions on the sale and trading of CFDs. It is difficult to see how binary options, in particular, can pose a risk given that no one can trade in them.

More understandably, ESMA stated that the equities market showed signs of heightened risk over the course of the first quarter of 2018. It noted that equities have seen significant price corrections in the past few months with a 6 percent reduction in EU stocks in just one week in February.

About the Author: David Kimberley
David Kimberley
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About the Author: David Kimberley
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