ESMA issued the latest iteration of its risk dashboard, which covers risks in the securities markets in EU for the first quarter of 2018. The overall risk assessment of ESMA remains unchanged from the fourth quarter of 2017. The outlook for liquidity, contagion, and credit risks remains unchanged at high. Operational risk continues to be elevated, with a deteriorating outlook, as Brexit-related risks to business operations and vulnerabilities to cyber-attacks rise.
ESMA remains concerned about investor risks, which have been mounting across a range of products. Consequently, ESMA issued a pan-EU warning to consumers regarding the risks of buying virtual currencies. This follows its earlier risk alert on initial coin offerings (ICOs). To protect investors from undue risk-taking, ESMA also brought in a temporary prohibition of binary options and leverage restrictions on contracts for difference (CFDs) using its new product intervention powers under the Market in Financial Instruments Regulation (MiFIR).
In the first quarter of 2018, equity markets in the EU and elsewhere saw significant price corrections, with a 6% drop in EU stock prices and the return of market volatility. The risk assessment of ESMA also raises concerns about the persisting, very high market risks. These risks result from asset over-valuations in equities as well as market uncertainty, as the period of ultra-low interest rates draws to a close.
Keywords: Europe, EU, Securities, Risk Dashboard, Market Risk, Operational Risk, Virtual Currencies, Cyber Risk, Credit Risk, ESMA
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EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.
ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.
ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.