LONDON, March 23 — Keeping financial markets open is vital for the economy to function properly during the coronavirus epidemic, Steven Maijoor, chair of the European Union’s markets watchdog, said today.
Europe’s STOXX 600 index has fallen to around a seven-year low, with similar declines on Wall Street, raising the prospect of authorities suspending trading to create some breathing space from extreme volatility.
“Open markets allow the process of adjusting prices to new information to continue, and they provide liquidity to the benefit of investors by allowing them to rebalance portfolios and meet contractual obligations,” said Maijoor, chair of the European Securities and Markets Authority (ESMA).
A group of financial industry trade bodies in Europe and the United States had called on central banks, governments and regulators, including ESMA, in letters on Friday to keep markets open.
“We believe a joint statement by you to signal that European markets will continue operating is essential to build market confidence, and to emphasise that markets are needed most during times of economic uncertainty,” the trade bodies wrote.
“Further, it is imperative that essential personnel from our member firms have access to market, clearing or settlement operations sites.”
Market participants fear that if lockdowns become more stringent, staff at clearing houses and other market infrastructure operators could not get to work to keep markets running smoothly.
Britain, home to LCH, one of the world’s biggest clearing houses, has already indicated that market infrastructure staff are “key workers” for the economy during the epidemic.
Deutsche Boerse, which operates Eurex Clearing, said it was not facing any restrictions on its staff or any issues with how fast it can execute trades.
ESMA said last week that market infrastructure was holding up well and published guidance on how to make it easier for traders working from home. — Reuters
