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CMVM supports ESRB and ESMA Recommendations on containment of market risks


​14 May 2020

The CMVM welcomes and confirms its alignment in acting with the recommendations of the European Systemic Risk Board (ESRB) for ESMA and the competent national authorities regarding measures to strengthen European articulation for combating and preventing the impacts of the coronavirus pandemic on financial stability.
 
Among the ESRB recommendations that are supported by ESMA, the following should be highlighted due to their significance for the capital markets: 
  • Supervisory actions by national competent authorities, coordinated at European level by ESMA, on the exposure and vulnerabilities of investment funds to corporate debt and the real estate market;
  • Supporting flexibility of liquidity management mechanisms by entities that are more exposed to assets with less liquidity, particularly, asset management entities and investment funds;
  • Assessing the impacts of ratings' downgrades within the various segments of the financial system, at European level – a work coordinated by the ESRB in cooperation with the European Supervisory Authorities. 
The CMVM has been thoroughly monitoring the impacts of the pandemic on the national and international asset management industry, particularly on instruments with greater exposure to corporate debt and the real estate market.

In this regard, the reporting requirements were reinforced and the CMVM maintains a daily monitoring of the relevant developments, as well as open communication channels with the various market entities and with ESMA and IOSCO. This monitoring is additional to the ongoing analysis of asset valuation practices by investment fund management companies and exposure to corporate debt, particularly the one with the highest exposure to risk, and to the real estate market. 

The CMVM is committed to initiating, as soon as possible, within the scope of ESMA and in broader articulation with other authorities, the harmonised analysis at European level of the resilience of the two segments of the investment fund industry, as well as the impacts on the national financial system of potential consequences of credit ratings downgrades for corporate debt. 

Given the severity of the shock and while, emphasising the uncertainty and challenges that still lie ahead, the CMVM highlights the resilience of the national market to the initial shock of the pandemic to date, as well as the professional response offered by the investment fund industry. 

The CMVM's approach to the consequences of the pandemic values  four dimensions in particular: the quality of market information and investor protection; monitoring and weighing short and medium-term operational and financial risks; the careful assessment of regulatory and reporting duties in the current context; and the issuance of guidelines on best practices, which value medium and long-term sustainability principles and sound corporate governance. 

CMVM’s response to the Covid-19 pandemic can be found on the page created for that purpose on the CMVM website.