European exchanges will be impacted by the ongoing spread of coronavirus but must continue to operate as normal, the Federation of European Security Exchanges (FESE) has asserted.
The FESE, with members comprising of European exchange operators, stated it was vital that markets stay open, and detailed the important role exchanges play in providing price formation, transparency and liquidity.
Preventing exchanges from operating would have a massive, detrimental impact on the economy, FESE added, with OTC markets in particular likely to see material impact from a closure of lit markets.
“Closing the markets would not change the underlying cause of the market volatility, it would remove transparency of investor sentiment and reduce investors access to their money; all of which would compound current market anxiety and result in a negative decline in investor outcomes,” FESE said.
Exchange groups in the US are also fighting similar calls for closure. US Treasury Secretary Mnuchin said recently that he had met with banks and exchanges urging them to shorten trading hours in light of the impact of coronavirus. Not all exchanges agreed with the proposal, and some were thrown off guard by Mnuchin’s comments.
“These functions have been put to the test in the past for example during the financial crisis – when other sources of liquidity dried – exchange markets successfully continued to operate. This situation is no different, exchanges should continue to be operational to maintain trust,” FESE added.