LONDON (Reuters) – Investment firms must take particular care to treat their customers fairly as trading by less experienced retail investors surges in volatile markets during the COVID-19 pandemic, the European Union’s securities watchdog said on Wednesday.

The European Securities and Markets Authority (ESMA) said several national regulators in the EU have noticed a significant increase in the number of retail clients opening investment accounts and trading.

Stock markets saw big falls in record volumes during March as countries entered lockdowns to fight the coronavirus pandemic, with some EU states introducing bans on short-selling.

ESMA said financial firms have a legal obligation under the bloc’s securities laws to act honestly, fairly and professionally.

They have even greater duties towards investors that are new or have limited investment knowledge or experience to trade in intensified market volatility, it added.

“ESMA emphasises that firms should pay particular attention to the possible ramifications of the COVID-19 crisis for the client’s personal situation and the risk profile of his financial instruments to ensure that these financial instruments are suitable for him.”

Britain’s Financial Conduct Authority has also been warning that the pandemic could initiate new types of scam activity.

“Unfortunately we do see some scams and other bad behaviour come out of the woodwork whenever you get a crisis like this,” FCA interim chief executive Christopher Woolard told a webinar on Monday.

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