The European Securities and Markets Authority (ESMA) has released its second risk monitoring report for 2025, highlighting significant risks in EU financial markets. Geopolitical events, particularly escalating trade conflicts, are driving pronounced volatility in securities markets. Investor risks are also elevated in crypto-asset markets due to political developments and new, high-risk business models. ESMA identifies high or very high risks across its remit, cautioning investors about potential sharp market corrections and liquidity strains. Chair Verena Ross emphasized that global uncertainties could trigger sudden market downturns. She also noted that the growing sophistication of cyber and hybrid threats amplifies operational disruption risks. Retail investors face increased risks of poor decisions due to information overload and misinformation, especially via social media. The EU equity market experienced high volatility, with sharp falls and recoveries in April, though it ended the first half of 2025 up 11%. Fixed income markets saw corporate bond spreads widen significantly in April due to trade tensions. Crypto markets, despite a valuation drop, remain near historical peaks, boosted by US policy but facing concerns over conflicts of interest and money laundering. Asset management funds showed resilience but leverage and liquidity risks persist. Consumers' confidence rebounded, with strong demand for bond funds, equities, and ETFs. Cyber risks continue to rise globally, and operational vulnerabilities have been exposed, though without systemic impacts. Corporate financing via equity markets has slowed, while corporate bond issuance remains stable but debt sustainability is a concern. Sustainable finance sees sustained investor appetite for ESG strategies and green bonds, with new ESMA guidelines combating greenwashing. Tokenisation adoption is limited but growing, while agentic AI poses new supervisory challenges.