ESMA Assess the Risks in Its Overall Remit as "Remaining Very High"

The European Securities and Markets Authority (ESMA) publishes the first Risk Dashboard for 2021, and "assesses the risks in its overall remit, securities markets, infrastructures and in asset management as remaining very high."

According to the paper, the EU market valuations are now "at or above levels compared to before the COVID-19 related market stress for most market segments, indicating a continued decoupling of securities prices from economic fundamentals with a risk of potentially significant market corrections."

ESMA noted in the report that the European securities market continued their recovery during 1Q21 with US and EU equity price/earning ratios hiking up. As for infrastructures and services, "the central clearing environment remained stable over the reporting period." Retail trading increased during and since the pandemic, potentially due to increase in savings stemming from restrained consumption under repeated lockdowns (R.24), digitalisation, high volatility encouraging speculation and relatively low valuations at the end of 1Q20 after the sharp downward movement at the start of the pandemic 

ESMA is expected to see "a prolonged period of risk to institutional and retail investors of further – possibly significant – market corrections and see very high risks across the whole of the ESMA remit."

Recently, ESMA​ has named Natasha Cazenave as its Executive Director, succeeding Verena Ross.