The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is today publishing a supervisory briefing on circuit breakers, which provides a comprehensive overview of supervisory expectations regarding the calibration of circuit breakers implemented by trading venues (TVs).

The supervisory briefing outlines several principles that national competent authorities (NCAs) should enforce to ensure effective circuit breaker implementation and aims to strengthen convergence among NCAs on circuit breaker calibration methodology, promoting compliance, common understanding and enforcement practices.

The guidance comes in the context of the letter ESMA sent to the European Commission about measures to be implemented in energy markets. Publishing this briefing was deemed necessary in light of recent events such as Russia’s military aggression against Ukraine and the May 2022 flash crash which led to, at times, extreme volatility in commodity derivatives and equity markets.