Regulatory Alerts2020-01-31
ESMA Opinion on Consob's Intended Accepted Market Practice on Liquidity Contracts
The European Securities and Markets Authority issued an opinion assessing Consob's notification of an intended Accepted Market Practice for liquidity contracts on Italian shares and closed-end real estate funds. ESMA identified significant risks of market manipulation and conflicts of interest, particularly when financial intermediaries bear the financial risk of the contracts. The authority highlighted concerns regarding adverse incentives for price distortion and the potential misalignment between intermediary profit motives and market integrity safeguards.
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