The European Securities and Markets Authority (ESMA) has released a number of recommendations for market participants relating to business continuity, market disclosure, and financial reporting as the COVID-19 crisis continues to unfold.
‘Following a Board of Supervisors discussion examining the market situation and contingency measures taken by supervised entities, ESMA is making the following recommendations to financial market participants,’ the regulator said. They include:
- Business continuity planning: all market participants should be ready to apply their contingency plans, including business continuity measures, to ensure operational continuity in line with regulatory obligations;
- Market disclosure: participants should disclose, as soon as possible, any relevant significant information concerning the impacts of COVID-19 on their fundamentals and financial situation in accordance with their transparency obligations under the Market Abuse Regulation;
- Financial reporting: participants should provide transparency on the potential impacts of the virus, the possible qualitative and quantitative impact on their business activities, as well as the financial situation and economic performance of 2019 year-end financial report if these have yet to be finalised;
- Fund management: asset managers must continue to apply the requirements on risk management and react accordingly.
The regulator added that in coordination with the National Competent Authorities, it ‘continues to monitor developments in financial markets as a result of the COVID-19 situation and is prepared to use its power to ensure the orderly functioning of markets, financial stability and investor protection.’
Other financial regulators, including the FCA and CBI, have released similar statements on business continuity, reiterating their expectation that fund managers continue to meet their legal and reporting obligations.