The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has released a statement to highlight to retail investors the risks connected with trading decisions based exclusively on exchanges of views, informal recommendations and sharing of trading intentions through social networks and unregulated online platforms.
The statement is issued as
part of ESMA’s investor protection objective to safeguard retail
investors, whose participation is key to the development of the Capital
Markets Union.
Several recent episodes have seen certain US stocks
experience high price volatility based on information shared on social
media. Although market rules and structures are different in the
European Union, it cannot be ruled out that similar circumstances may
develop here.
The statement highlights the following issues:
- Investors need to use reliable information for investment decisions;
- Increased risk of investor loss due to price volatility; and
- Risk of committing market abuse.
Next steps
ESMA and the National Competent Authorities will continue analysing
market events and consider adopting further initiatives aimed at
preserving investor protection and market integrity as appropriate.
statement
ESMA
© ESMA
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