Faced with the stock market crash triggered by the COVID-19 pandemic, should the financial markets be temporarily closed? The President of the European Securities and Markets Authority (ESMA), Steven Maijoor, responded with a firm “no” on Monday 23 March.
“ESMA’s objective is to maintain markets that are open and orderly as they are vital for the functioning of our economy and financial system, especially in the current circumstances”, he said.
“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”, he explained.
The statement follows a letter from ten financial organisations, addressed on Friday 20 March to the Vice-President of the European Commission, Valdis Dombrovskis, as well as to the Presidents of the ECB, ESMA, EBA and the Finance Ministers of Germany, France, Italy, the Netherlands and the United Kingdom.
The signatory organisations (Better Finance, EuropeanIssuers, Insurance Europe, the Managed Funds Association, the World Federation of Exchanges, AFME, AIMA, EFAMA, FESE and ICI Global) are calling for “a joint statement” from these European players stating that financial markets will continue to function, in order to strengthen market confidence.
"Closing the markets would have a devastating impact on the European economy”, they warn. (Original version in French by Marion Fontana)