The European Securities and Markets Authority (ESMA) today published a consultation paper on how National Competent Authorities (NCA) should ensure that trading venues have appropriate communication protocols in case of a market outage.

The consultation paper seeks feedback from market participants on its proposed guidance, and in particular on the proposals that trading venues should have appropriate communication protocols in place ensuring communication to members, participants and the public during an outage.

According to ESMA’s proposals, NCAs should ensure that trading venues have in place a clear outage plan to be deployed in case of an outage.

The outage plan should always be deployed during an outage, regardless of the outage gravity. It should ensure that appropriate and proportionate actions are deployed by the trading venue, according to the reality of the disruption at hand.

Also, the outage plan should set out all the steps that will be undertaken to restore an orderly trading in case of an outage. The crisis management procedure should indicate for each step when it needs to be performed and the person/ function within the trading venue responsible for it.

The plan should describe all the actions that the trading venue may take during an outage, as well as any alternative arrangement foreseen for such circumstance.

Further, the outage plan should also clearly describe the trading venues’ strategy for reopening, detailing the steps the trading venue will undertake for the resumption of trading once the issue causing the outage has been fixed.

In addition, the outage plan should identify how information on outages is communicated (for example via the trading venue website) and what information is to be included in the communication. It should also set out clear procedures on how to treat incoming and existing orders, including defined procedures on trade / order cancellations.

The outage plan and any following amendments should be made available to members and participants of the trading venue. In exceptional circumstances, the trading venue may need to change its outage plan at the time of a disruption in order to better address the current outage. In this case, trading venues should also communicate immediately to all market participants. The outage plan, and any amendments, should always be made available to the respective NCAs, and the public via the trading venues’ public website.

NCAs will need to ensure that trading venues regularly and at least every two years review, test and update the outage plan, to ensure those are always up-to-date and adapted to all possible circumstances.

The guidance, that ESMA intends to issue in the form of an opinion, will apply to equity markets and, where applicable, to non-equity instruments.

Interested parties are invited to send their contribution until 16 December 2022. ESMA will consider the feedback and publish a final opinion in Q1 2023.