(Reuters) – The European Securities and Markets Authority (ESMA) said on Wednesday it was reviewing recent market moves, including the surge in credit default swaps (CDS), an instrument that allows to hedge against the risk of default by an issuer, after the recent volatility of transactions.
“ESMA, together with national regulators, has looked into recent market movements, including in the CDS market,” a spokesperson for the financial market watchdog said. EU.
The move comes after European Central Bank (ECB) Supervisory Board Chairman Andrea Enria said on Tuesday that Deutsche Bank’s stock volatility was concerning as it showed investor jitters.
Andrea Enria also warned that a collapse in the CDS market could have wider ramifications on the much larger equity market.
Regulators are particularly interested in a Deutsche Bank CDS transaction that they suspect fueled a global selloff on Friday, Bloomberg reported on Thursday.
Shares in Germany’s largest bank tumbled last Friday on a sharp rise in its five-year CDS, triggering concerns about the stability of the entire European banking ecosystem.
(Report Akanksha Khushi in Bengaluru and by Huw Jones; written by Jason Neely; French version Diana Mandiá, edited by Blandine Hénault)
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