ESMA Recommends Coronavirus Contingency Plan

ESMA recommends a Coronavirus contingency plan for financial market participants. Issuers must disclose all relevant and significant information concerning the impact of Coronavirus on their fundamentals, prospects or financial situation.

12 March, 2020 | AtoZ Markets – The World Health Organization (WHO) has declared the COVID-19 epidemic to be a pandemic, citing infections in more than 121,000 people worldwide. It has spread to several countries or continents, generally affecting a large number of people. Director-General of WHO, Dr Tedros Adhanom Ghebreyesus said that controlling the COVID-19 epidemic is a responsibility of all countries of the world. He also added that there are now more than 118,000 cases in 114 countries and 4,291 deaths.

Market Participants Need to Prepare for COVID-19 Impact

European Securities and Markets Authority (ESMA) and the National Competent Authorities (NCAs) are closely monitoring the situation, given the continuing impact of the COVID-19 epidemic on the financial markets of the European Union. ESMA also said it is ready to use its powers to ensure the orderly functioning of the markets, financial stability and the protection of investors.

ESMA recommends that financial market participants prepare to apply their Coronavirus contingency plans. The authority makes the four recommendations to financial market participants:

  • Business Continuity Planning
  • Market Disclosure
  • Financial Reporting
  • Fund Management

ESMA recommends that all financial market players, including infrastructure, be ready to apply their contingency plans. It includes the deployment of business continuity measures to ensure operational continuity under obligations regulatory.

The European authority advises issuers to disclose any relevant information concerning the impact of COVID-19. It would be on their fundamentals, prospects or financial situation, under their transparency obligations under the market abuse regulation.

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ESMA also advises issuers to ensure transparency on the actual and potential impacts of COVID-19. It based on a qualitative and quantitative assessment of their business activities, their financial situation and economic performance. This information must be provided in their 2019 year-end financial report if it has not yet been finalized or otherwise in their interim financial reports.

Besides, asset managers should continue to apply the risk management requirements and react accordingly, recommends ESMA.

Today, Chicago Mercantile Exchange (CME) Group suspends its Chicago trading floor due to Coronavirus outbreak. However, it said no cases of Coronavirus had been reported to the trading floor.

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