ESMA Reports on Market and Valuation Risks

April 2017

The European Securities and Markets Authority (ESMA) has issued the report, ESMA Report on Trends, Risks and Vulnerabilities No. 1, 2017 (Report), which identifies and discusses the main securities market risk drivers for 2017. The Report concludes that the main risk drivers were political and policy uncertainty, including potential repercussions from the upcoming elections in some European Union (EU) Member States.

The Report discusses market developments from July to December, 2016. It concludes that the risks in EU markets remain at high levels. This conclusion reflected ‘very high risk’, the highest level of risk, in securities markets and elevated risks for investors, infrastructures and services. ESMA assesses liquidity and contagion risks for the period as high.

The Report also notes that, despite the prevailing market and valuation risks, financial markets remained relatively calm and stable during the 2016 reporting period.

Risks identified in the Report include:

  • The continuing low yield environment 
  • Excessive risk-taking in the marketplace 
  • Uncertainties around the growth outlook in the EU and the global economy 
  • Concerns over political events and resulting policy uncertainties.

The Report is available on this link. 

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