Coronavirus (COVID-19): UK FCA and EU ESMA Issue Statements on Pandemic

March 16, 2020

The EU watchdog, The European Securities and Markets Authority (ESMA), which coordinates securities market supervision across the 27 countries of the European Union, announced on March 11 that it was prepared to use its powers to ensure the orderly functioning of markets, financial stability, and investor protection, and issued the following recommendations to financial market participants (FMPs) in the European Union:

  • Business continuity – all FMPs should be ready to deploy business continuity measures to ensure operational continuity in line with regulatory obligations
  • Fund management – asset managers should continue to apply the requirements on risk management and react accordingly
  • Market disclosure – issuers should disclose as soon as possible any relevant significant information on the impacts of coronavirus (COVID-19) on their situation in accordance with transparency obligations
  • Financial reporting – issuers should include disclosures about the actual and potential impacts of COVID-19 in their 2019 financial statements or otherwise in interim statements.

A week earlier, the UK The Financial Conduct Authority (FCA) released a statement on March 4 on COVID-19 advising that it is working closely with firms, institutions, and industry bodies in the financial services sector to ensure the sector is responding to the outbreak effectively.

FCA made the following points:

  • FCA (and, in the case of banks, the Bank of England) is actively reviewing the contingency plans of a wide range of regulated firms
  • FCA expects regulated firms to take all reasonable steps to meet their regulatory obligations, for example, to enter orders into relevant systems and use recorded lines when trading
  • FCA is comfortable with the use of backup sites and home-working where regulated firms are nevertheless able to continue to meet all applicable standards

Similar action has been taken in China as described in our March 2 lawflash and in Hong Kong as described in our February 20 lawflash.