The Game Stop case is still a current lesson. Market participants in global financial markets are well aware of this. On the other hand, we are talking about the largest video game retailer in the world ended up in the center of a perfect stock storm, triggered very simply by a social platform. And this is precisely the problem.
It all started when non-professional traders, coordinated through the Wall Street Bets forum on Reddit (social news site where registered users can publish content in the form of text posts or hyperlinks) targeted some hedge funds that had bet against Game Stop, selling its shares short. From then on, the title of the company was a continuous roller coaster, lasting weeks.
A precedent that ended up at the center of the reflections of Andrea Sironi , president of Borsa Italiana, fresh from reorganization at the top with the alternation between Fabrizio Testa , the new CEO and his predecessor, Raffaele Jerusalmi , the result of the entry of Piazza Affari into the perimeter of the Euronext consortium . The Game stop case “highlighted a decisive role of retail investors and the volatility of the markets, and especially of social media, because much of the activity was led by them”, explained Sironi, heard in the Banks committee, chaired by Carla Ruocco .
“It should be remembered that from what has been learned and what can be guessed, in the Game Stop affair a decisive role has been played by private investors, whose operations have grown in recent months, also as a consequence of the pandemic and the volatility of the markets with consequent strong growth in volumes traded. As often happens, many investors have perceived the high volatility following the 2020 crisis as an opportunity to obtain higher returns, tending to underestimate the related risks ”, explained Sironi.
Who promptly reassured Parliament about the excellent ability of the Italian stock market to prevent phenomena that could lead to fluctuations in anomalous securities. “The Italian market surveillance system – public and private – is characterized by safeguards and tools designed to prevent extraordinary anomalies such as that found in the case of the price trend of Game Stop shares”.
Borsa Italiana itself “has always paid the utmost attention to the development and adoption of safeguards and controls for the purposes of the regular and orderly conduct of trading in an automated trading environment. As an example, consider that i
markets have automatic protection functions to block anomalous situations in the trend of prices and volumes and to contain situations of extreme volatility. For this reason, mechanisms are always active (such as suspensions due to excess volatility or automatic rejection of orders that exceed the thresholds set in terms of volume and prices) to limit or suspend trading of one or more financial instruments, when this is the case. necessary to maintain the orderly conduct of trading and investor protection “.
Sironi also focused on cryptocurrencies. “I have always thought that here there is a key role for the monetary authorities which in our case is the ECB. Much will depend on these authorities on the future development of these markets. It is important to have a common approach in the community. Different orientations in the countries would create difficulties ”.
