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    A.S.F. is closely monitoring the impact of the crisis in ukraine on the capital market

A.S.F. is closely monitoring the impact of the crisis in ukraine on the capital market

Bucharest, 24 March 2022 - The Financial Supervisory Authority (A.S.F.) has stepped up its monitoring of capital market entities following the outbreak of the crisis in Ukraine, in the exercise of its duties aimed, inter alia, at ensuring the stability, competitiveness and proper functioning of financial instruments markets, promoting confidence in these markets and in investments in financial instruments, and ensuring the protection of operators and investors against unfair, abusive and fraudulent practices.

”A.S.F. pays particular attention to prudential supervision of the financial stability of market entities, diversification and valuation rules for investment fund portfolios and risk management mechanisms, with a focus on liquidity risk and the use of tools such as stress tests," said Mr. Ovidiu Petru, General Manager of the General Directorate - Financial Instruments and Investments Sector.

Some of the surveillance tools used were implemented in the early period of the COVID-19 pandemic and have proven their effectiveness. Thus, at the level of investment funds, reporting on net subscriptions has been implemented, analysed in relation to the evolution of their portfolio structure, while daily communication with management companies on any shortcomings that may occur in risk management has been carried out. In line with the situation in other European markets, a maturing of the investor pool and a lower impact was observed as compared to the pandemic period.

At the same time, the frequency of reporting on the fulfilment of capital requirements at the level of IMCs and FISCs has been increased. At the supervisory level, a dynamic analysis is carried out, with scenarios of developments based on changes in stock market indices and the structure of entities' earnings. The Romanian capital market, as an emerging market, is connected with the European markets, thus correlating index fluctuations.

At the same time, A.S.F. has asked market institutions to intensify their efforts to adopt all measures to identify and mitigate the main cybersecurity risks and to notify the Authority if vulnerabilities appear in this segment.

Following the Authority's analysis, it was found that there are no exposures of investment funds, investment management companies, financial investment services companies and market institutions to financial instruments issued by companies and administrative units of the Russian Federation. There were also no dysfunctions in the activity of authorised and supervised entities.

A.S.F. is in permanent contact with the European Securities and Markets Authority (ESMA) and the other competent European authorities in order to assess existing situations in national markets and to exchange views and best practices on the supervisory and intervention tools used.