The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has today published its final report including an Opinion on market outages, highlighting the importance for trading venues of having an appropriate outage plan to communicate to their members, participants, and the public.
In the Opinion, ESMA also sets out steps trading venues should take to reopen trading in an orderly manner.
ESMA provides in this format its expectations of how National Competent Authorities (NCA) should ensure that trading venues have appropriate communication protocols in place, which arrangements should be in place to avoid an outage affecting the closing auction and how trading venues should ensure the market is provided with an official closing price. In addition, the Opinion also provides considerations on non-equity instruments, in particular for derivatives markets.
To prepare this Opinion, ESMA published a review report on algorithmic trading in September 2021 where it committed to providing guidance on how trading venues should communicate with market participants in case of an outage. This was followed by a consultation launched in September 2022, on ESMA’s proposed guidance on market outages.
ESMA expects that, considering the guidance provided in this Opinion, NCAs ensure that trading venues have in place an appropriate outage plan ready to be deployed in case of an outage.