ESMA: Market Conditions Improve, but Systemic Risks Persist
The European Securities and Markets Authority (ESMA) has published its Trends, Risks, Vulnerabilities (TRV) Report and a Risk Dashboard for the second quarter of 2013.
The TRV examines the performance of securities markets in the first half of 2013, assessing both trends and risks in order to develop a comprehensive picture of systemic and macro-prudential risks in the European Union (EU), to assist both national and EU bodies in their risk assessments. 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.
The TRV finds that EU securities markets and investment conditions in the EU improved for a second quarter in a row since Q412, although systemic risk persisted at medium to high levels. Among other risk factors, uncertainty remained high due to concerns over funding sources, low interest rates and recent market fluctuations, resulting in increased market risk, while liquidity, credit and contagion risk continue to be significant.
“While the easing of stress in financial markets is a positive sign, systemic risks in the EU remain high and uncertainty in the international market environment has risen. Valuations in securities markets, volatility in fund flows, and continuity issues around financial benchmarks remain a matter of concern,” said Steven Maijoor, ESMA chair. “Faced with these issues regulators and market participants should remain vigilant.
“ESMA’s work on identifying those risks facing Europe’s securities markets is an important component in the European System of Financial Supervision’s (ESFS) efforts to foster recovery in its markets and promote financial stability.”
The TRV identifies the following key trends for H113 in EU securities markets:
Key risks identified in the report, and published separately in the Risk Dashboard, include:
In addition, the TRV presents in-depth analyses on four specific topics: