ESMA concerned about risks posed to investors
08 June 2018 Paris
Image: Shutterstock
The European Securities and Markets Authority (ESMA) remains concerned about risks posed to investors, according to the latest iteration of its risk dashboard.
According to the update, ESMA’s overall risk assessment remained unchanged from Q4 2017 at high levels, but ESMA remained concerned about the risks posed to investors, which have been mounting across a range of products.
As a result, ESMA has issued a pan-EU warning to consumers regarding the risks of buying virtual currencies. This follows its earlier risk alert on initial coin offerings.
To protect investors from undue risk-taking, ESMA also introduced a temporary prohibition of binary options and leverage restrictions on contracts for difference using its new production intervention powers under the market in financial instruments regulation.
In Q1 2018, equity markets in the EU and elsewhere saw significant price corrections, with a six percent drop in EU stock prices in the week of 5 February alone, and the return of market volatility.
ESMA’s risk dashboard also raised concerns about persisting very high market risks. These risks result from asset over-valuations in equities as well as market uncertainty as the period of low interest rates draws to a close.
ESMA’s outlook for liquidity, contagion, and credit risk remains unchanged at high. Meanwhile, operational risk continues to grow as Brexit-related risks to business operations and vulnerabilities to cyber-attacks rise.
According to the update, ESMA’s overall risk assessment remained unchanged from Q4 2017 at high levels, but ESMA remained concerned about the risks posed to investors, which have been mounting across a range of products.
As a result, ESMA has issued a pan-EU warning to consumers regarding the risks of buying virtual currencies. This follows its earlier risk alert on initial coin offerings.
To protect investors from undue risk-taking, ESMA also introduced a temporary prohibition of binary options and leverage restrictions on contracts for difference using its new production intervention powers under the market in financial instruments regulation.
In Q1 2018, equity markets in the EU and elsewhere saw significant price corrections, with a six percent drop in EU stock prices in the week of 5 February alone, and the return of market volatility.
ESMA’s risk dashboard also raised concerns about persisting very high market risks. These risks result from asset over-valuations in equities as well as market uncertainty as the period of low interest rates draws to a close.
ESMA’s outlook for liquidity, contagion, and credit risk remains unchanged at high. Meanwhile, operational risk continues to grow as Brexit-related risks to business operations and vulnerabilities to cyber-attacks rise.
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