In its final report, including an Opinion on market outages, the EU regulator highlights the importance for trading venues of having an appropriate outage plan to communicate to their members, participants, and the public.
ESMA also sets out steps trading venues should take to reopen trading in an orderly manner.
The report outlines ESMA’s expectations of how National Competent Authorities (NCA) should ensure that trading venues have appropriate communication protocols in place: including which arrangements should be in place to avoid an outage affecting the closing auction and how trading venues should ensure the market is provided with an official closing price.
In addition, the Opinion also provides considerations on non-equity instruments, in particular for derivatives markets.
To prepare the Opinion, ESMA published a review report on algorithmic trading in September 2021 where it committed to providing guidance on how trading venues should communicate with market participants in case of an outage. This was followed by a consultation launched in September 2022, on ESMA’s proposed guidance on market outages.
“ESMA expects that, considering the guidance provided in this Opinion, NCAs ensure that trading venues have in place an appropriate outage plan ready to be deployed in case of an outage,” said the regulator.
