ESMA And CSSF Guidance On The Impact Of COVID-19 On Financial Markets

The European Securities and Markets Authority (ESMA) and Luxembourg's Financial Sector Supervisory Authority (CSSF) have issued press releases in relation to the impact of the COVID-19 virus outbreak on the stability of financial markets.

After examining the market situation and contingency measures implemented by supervised entities, ESMA has issued the following recommendations to market participants:

Business continuity planning - all financial market participants and their infrastructures should be ready to deploy contingency plans and ensure operational continuity aligned with their regulatory obligations Market disclosure - any relevant significant information which concerns the impact of COVID-19 on their fundamentals, prospects or financial situation should be disclosed by the issuers, in keeping with their transparency obligations pursuant to the Market Abuse Regulation Financial reporting - issuers should, either in their 2019 year end or in their interim financial reports, provide transparency regarding the actual and potential impacts of the outbreak on their business activities and financial situation Fund management - asset managers are expected to continue applying risk management requirements and adjust accordingly The CSSF, for its part, has stated that it will closely monitor market developments, particularly the liquidity situation, which is essential in terms of crisis management. Acknowledging the daily operational challenges faced by supervised entities, the CSSF has vowed to refocus its interventions towards operations that are crucial in preserving financial stability as well as investor and consumer protection, and to continue supporting the financial sector through regular communication.

Noting that supervised entities had already started to implement business continuity plans by taking into account the relevant guidelines, the CSSF encouraged them to also remain attentive to the elevated IT security and fraud risks.

Following recent developments in Luxembourg and the EU, the CSSF has issued its first FAQ on COVID-19, urging entities under its supervision to favour working from home and making clear that no prior...