EU Regulator ESMA Outlines High Risks for EU Retail Investors

EU Regulator ESMA outlines high risks for EU retail investors, associated with the increased demand for the digital currencies. Moreover, the heightened investors’ appetite for initial coin offerings has also impacted the level of risks, according to the regulator.

21 March, AtoZForex The key financial regulator of the EU markets, the European Securities and Markets Authority (ESMA) has published its latest report on Trends, Risks, and Vulnerabilities (TRV). ESMA has also outlined its risk assessment for the EU investors.

EU Credit risks are improving

The ESMA has highlighted that the EU risk categories are still at a high level. During this February, equity markets experienced very high level of volatility, thanks to the strong market correction that took place during that period.

The recent report has noted the findings of risks that is dominant in the EU securities market. The authority has classified four different types of risks as: Market Risk, Credit Risk, Operational Risk, and Retail Investor Risk.

In fact, the market risk has become a factor due to the high market asset valuations. Moreover, the geopolitical uncertainty has caused market turmoil. The most bright example of the market risk is the upcoming Brexit process, which is expected to impact EU financial markets in many ways.

According to the ESMA, the credit risk across the EU has eased from “very high” to “high”. The improved levels of credit risk are linked to the higher credit ratings in several EU Member States.

EU Regulator ESMA Outlines High Risks for EU Retail Investors

Moving on, the operational risks in the region are presently connected to the cyber concerns, as they maintain stable levels for some time already. In the meantime, retail investment risks have spiked, as a result of the demand increase in cryptocurrencies. Heightened EU investors’ appetite in ICOs has also contributed the the picture.

ESMA plans to lower the risks for the retail investors. Earlier in December 2017, the regulator has moved to ban Binary Options industry across the bloc, as it also limited the leverage on Forex trading to 1:30.

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