EU Watchdog Monitoring Accelerating Retail Trading in Traditional and Cryptocurrency Market; May Even Step In

ESMA chair Steven Maijoor said the new retail activity is concentrated in young investors and “speculative.”

European Union regulators are inspecting the market transactions and may intervene after a surge in online trading by retail investors, said the securities watchdog of the bloc.

“We are closely monitoring these new developments and are assessing whether any further supervisory actions are needed,” Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), told an Afore Consulting webinar.

During the 5th Annual Conference on ‘FinTech and Regulation: New Challenges and New Solutions,’ Maijoor touched upon the digitization, accelerating trends, and risks and opportunities.

Besides the frenzied bout of retail trading in the traditional markets, particularly in blue chips in France, which rose fourfold last March and overall volumes tripled, cryptocurrencies are their matter of concern. He said,

“A related development of clear concern is the large price bubble that formed in Bitcoin and other crypto-assets during the second half of 2020. Although it is hard to establish cause and effect, increased speculation in this area may be linked to increased retail trading of traditional financial instruments,”

The ESMA chair further noted that while it has “never been easier to gain exposure to Bitcoin,” now popular apps used for standard financial purposes are also offering crypto trading; as such, they “will remain vigilant in monitoring developments.”

The regulators are concerned about the risk of new activity being “speculative” and that this growth in investing that is concentrated among young investors have them turned to day trading to fill their time during lockdowns.

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