LONDON, Mar 23 (Reuters) – Keeping financial markets open is vital for the economy to continue to function properly during the COVID-19 epidemic, Steven Maijoor, president of the European Union’s market watchdog, said on Monday.
The European STOXX 600 index has hit a low of seven years ago, in line with declines on Wall Street, fueling speculation that the authorities may suspend trading to pause extreme price volatility.
“Keeping the markets open allows the process of adjusting prices to news developments to continue, while also providing liquidity for investors by allowing them to rebalance their portfolios and meet contractual obligations,” said Maijoor, president of the European Authority for Securities and Markets (ESMA).
A group of financial contracting agencies in Europe and the United States called in writing on Friday in several letters to central banks, governments and regulators, including ESMA, to keep markets open.
“We believe that a joint statement by all of you indicating that European markets will continue to operate is essential to sustain market confidence, as well as to emphasize that markets are most needed in times of economic uncertainty,” the agencies wrote.
“In addition, it is imperative that essential members of our staff have access to the marketplace, to clearing or settlement locations.”
Market players fear that if quarantines are tightened, clearinghouse staff and other operators of securities markets infrastructures may not be able to work smoothly.
The UK, home to the LCH, one of the world’s largest clearing houses, has already indicated that market infrastructure staff are “key workers” to the economy during the epidemic.
Deutsche Boerse, the operator of Eurex Clearing, said it was not having to face any restrictions on its staff or any problem as to how quickly its operations can be carried out.
ESMA said last week that the infrastructure of the financial markets is in good shape and published a guide on how to make work easier for stockbrokers who work from home.
(Edited in Spanish by Darío Fernández in the Gdansk newsroom)