High Risks Linger for European Securities Markets and Investors: ESMA
- The European Securities and Markets Authority also noted its concerns over high risk retail investments, including ICOs.

The European Securities and Markets Authority (ESMA) on Tuesday released its latest Trends, Risks, and Vulnerabilities (TRV) report, painting a concerning picture regarding its risk assessment for the outlook of European investors.
The ESMA report notes that the EU’s risk categories have remained at a high level. During February of 2018, equity markets saw very high levels of volatility as a result of a strong market correction that occurred during the month, further reinforcing the authority’s claims.
Various levels of risk
Today’s report presents findings of prevalent risk in the EU's securities markets. The different types of risk are classified into the following categories: Market Risk, Credit Risk, Operational Risk, and Retail Investor Risk.
According to the report, credit risk has actually improved as of late, easing from ‘very high’ to ‘high’, based on ESMA assessments. The enhanced levels of credit risk are related to higher credit ratings in several EU Member States and a generally stronger macroeconomic environment across the EU.
Operational risks are currently mainly associated with cyber concerns and have maintained stable levels for some time.
Meanwhile, retail investment risks have seemingly increased as a direct result of the rise in demand for Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. Read this Term, as well as investor participation in ICOs, which are widely recognized as incredibly high-risk propositions and have been at the center of allegations over potential scams and fraudulent activity.
Recent ESMA activity
As part of its agenda of lowering risk for retail investors, the ESMA took steps in December of last year to outlaw the Binary Options industry in the region under its jurisdiction, as well as limiting leverage on FX trading to 1:30. The push for lower leverage has since been met with resistance from the FCA, which publicly contradicted the ESMA plans in a later January statement.
The ESMA has garnered a great deal of respect across the financial sector. CySEC, the regulatory body of Cyprus, which offers licenses to companies offering financial services in Europe, has even aligned its own guidelines with ESMA regulations over the appointment of new management body members.
The European Securities and Markets Authority (ESMA) on Tuesday released its latest Trends, Risks, and Vulnerabilities (TRV) report, painting a concerning picture regarding its risk assessment for the outlook of European investors.
The ESMA report notes that the EU’s risk categories have remained at a high level. During February of 2018, equity markets saw very high levels of volatility as a result of a strong market correction that occurred during the month, further reinforcing the authority’s claims.
Various levels of risk
Today’s report presents findings of prevalent risk in the EU's securities markets. The different types of risk are classified into the following categories: Market Risk, Credit Risk, Operational Risk, and Retail Investor Risk.
According to the report, credit risk has actually improved as of late, easing from ‘very high’ to ‘high’, based on ESMA assessments. The enhanced levels of credit risk are related to higher credit ratings in several EU Member States and a generally stronger macroeconomic environment across the EU.
Operational risks are currently mainly associated with cyber concerns and have maintained stable levels for some time.
Meanwhile, retail investment risks have seemingly increased as a direct result of the rise in demand for Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. Read this Term, as well as investor participation in ICOs, which are widely recognized as incredibly high-risk propositions and have been at the center of allegations over potential scams and fraudulent activity.
Recent ESMA activity
As part of its agenda of lowering risk for retail investors, the ESMA took steps in December of last year to outlaw the Binary Options industry in the region under its jurisdiction, as well as limiting leverage on FX trading to 1:30. The push for lower leverage has since been met with resistance from the FCA, which publicly contradicted the ESMA plans in a later January statement.
The ESMA has garnered a great deal of respect across the financial sector. CySEC, the regulatory body of Cyprus, which offers licenses to companies offering financial services in Europe, has even aligned its own guidelines with ESMA regulations over the appointment of new management body members.