In the u.s there has been some impact on individual issuers in the eu, but clearly this is mainly so far a u.s phenomenon and i think the lessons learned here, for example, relate to risks for investors, retail investors. What we have seen – and we also see that in europe, is that there is bigger participation during the covet 19 crisis by retail investors. But obviously there is risks in getting your advice from social media and you can question how that fits into let’s say a plan to save for the future. We’Ve always supported a bigger participation by retail investors in the capital markets, but obviously they should do that prudently. Yes, i mean: do you sense, then that new regulations could be required in europe? Well, not so much. I think this is really about applying existing requirements to the situation. As i just said, we have concerns around retail investors. Basically, they are buying behavior on inputs. From from social media, it’s important get that you get reliable information, but there are also risks, for example around the for retail investors, that they don’t violate rules on on the market abuse requirements uh. Obviously you should not give a manipulation or misleading signals. Uh around prices on on supply and demand in shares, and so retail investors need to be careful. There is how they participate in social media and what their messages are in that respect yeah. What is the dividing line in your mind, stephen between simple innocent comments on social media, about a company and manipulation? Have you have you learned more in this recent episode where about where that dividing line sits? Well, you know, as we typically say, the market abuse requirements are are complex, uh, obviously uh.
If you you know, you see that you’re interested in in in a stock and and you’re interested in buying it, and we know that there’s been especially an interest in uh. In those stocks in the u.s, where there were very high stroke positions uh and that in itself is is expressing a a buying intention is, is not um, you know, doesn’t create risks in terms of market views requirements. The the the real risk is around giving misleading signals around price and trying to coordinate that also with with other retail investors. Another point: i think that we need to look into uh. Looking at the the gamestop case is around um the fact that also technology uh online uh brokers, with zero commissions uh played an important role in in this. In this case, uh we’ve always been in favor of trying to lower the cost of investing. We know that in the longer term is that the uh, the cost of uh, you know, transactions etc. The impact, the the longer term performance of financial products, but we have concerns here around the payments for order flows, and so the relevant brokers, of course, can get payments. We know that that is happening for how they direct their order flows and that you know raises questions around putting the interest of the of clients. First, okay, and do you see positives, have you seen positives we’ve talked a lot about the concerns stephen, but do you see positives around increasing engagement from retail investors with capital markets in europe? Is that something that you can see the positives in that, as well as the negatives? Absolutely? No, that is a that is a positive one of the things where uh europe should really work on.
Uh is increasing uh. The role of capital markets in in the household savings uh of households across europe, despite the negative interest rates, we can see that there’s still a tendency in european families is to save through deposits, and obviously that is a very difficult financial planning strategy. If you want to get, you know safe for the future, save for uh educational expenses, for housing, uh for retirement, and so the fact that we have you know we have seen – and that is not only in the us, but also in europe. A bigger uh role of the um of the capital markets in household finances since the government 19 crisis. Apparently people have more time to invest that in itself is a a beneficial development and at the same time, you would hope that that households are really doing that. For the longer term – and you can question how the participation in such cases as as gamestop, how that fit into a longer financial plan of a household again, we have seen a limited number of european investors stepping into these stocks and then separately. That from that there have been few stocks in the eu have been affected. Uh, interestingly, of course, is that the short selling positions uh had an important role here and there’s more transparency in europe around short positions. What we have seen in the eu is a reduction of these short positions, the ones that are reported and i think, possibly as a reaction to what we have seen in the u.
s. Can i just get your thoughts on something else, stephen. While we have you – and that is around the brexit conversations, a memorandum of understanding is being being sought between the uk and the eu. Now i understand on financial services by march, which is not very far off now, what kind of expectation around equivalence and the timetable should we have, i think, it’s well, i i think it’s important to realize and and uh. This is first and foremost it’s um. It is a a political negotiation and it is for the uh, the european commission uh to um uh. You know to give their information on this on this process. Obviously, what the key issue here is is to what extent do we, from a european perspective, have sufficient assurance about where the regulatory and supervisory system goes in? Which direction will it go um in in the uk and and it’s important to point out how substantive that is for europe in in the past five to ten years, europe has worked very hard on trying to reduce differences among the member states in terms of supervision. In terms of regulatory requirements, we have moved from the so called directives to regulations. Precisely because we know is that differences in rules, differences in supervision can impact risks that they can impact a level playing field and therefore uh. I would assume that the commission will especially focus on that point where you know more information, more assurance regarding where the uk regulatory system will go in historics and where will be the changes.
Yes, i mean some would suggest that it might be a bit unreasonable to try and bind future uk administration stephen and that maybe you have to make equivalence decisions or might they might suggest you make equivalence decisions based on the reality and whether equivalence exists today, rather Than things that might or might not happen in the future, i i i understand that, and i also understand that that with the uk out is that they want to have their sovereignty around making and making the rules. But you know from a european perspective, there is the real and substantive issue is that there will be problems in terms of risk.