Article 42(14) of Directive 2014/59/EU mandates the EBA to issue guidelines to promote the convergence of supervisory and resolution practices regarding the determination of when the liquidation of the assets or liabilities under normal insolvency proceeding could have an adverse effect on one or more financial markets.
The guidelines set out three elements that should be considered by resolution authorities when assessing the market situation for the assets concerned and the potential direct and indirect effects on financial markets:
(a) whether the market for these assets is impaired;
(b) the impact of a disposal of these assets on the markets where they are traded;
(c) the situation of the financial markets and the direct and indirect effects of an impairment the markets for these assets.
For each of these elements, the guidelines identify a list of factors that resolution authorities should assess, with a particular view to the risk of putting additional pressure on prices and causing contagion.
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