Tuesday

17th Oct 2017

Court slaps down UK challenge to EU short-selling ban

The European Court of Justice has in a surprise move thrown out a UK legal challenge to EU rules on short-selling.

The ruling refers to legislation adopted in 2012, which gives the Paris-based European Securities and Markets Authority (ESMA) the power to ban short-selling as an emergency measure if it deems that there is a threat to the bloc's financial markets.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The UK argued that these powers to directly intervene in financial markets went beyond the terms of the single market and should only lie in the hands of national governments.

Short-selling involves traders borrowing shares and immediately selling them before buying them back at a lower price when their value falls.

Although advocates of the practice say that it leads to more accurate share pricing, it can also fuel speculation and undermine public confidence in markets.

In a ruling on Wednesday (22 January), the ECJ dismissed "in its entirety" four complaints by the UK government, finding that the regulation was "precisely delineated and amenable to judicial review" and conformed with the EU treaty.

It pointed out that the legislation requires ESMA to inform national regulators before it takes decisions and review them every three months.

But the ruling comes as a surprise. Less than four months ago, an opinion by the Court's advocate-general Niilo Jaeaeskinen suggested that ESMA's powers "go beyond what could be legitimately adopted as a harmonising measure necessary for the establishment or functioning of the internal market."

Although such opinions are not binding on the court, they are rarely contradicted by its team of judges.

The ruling also overturns a legal mechanism that UK officials have relied on to prevent 'mission-creep' since joining the European Community in 1971.

Under the so-called 'Meroni' ruling of 1958, which originally applied to the European Coal and Steel Community, delegated powers from EU institutions to agencies could not involve political judgements because this would undermine the balance of power between EU institutions.

Contacted by this website, a government spokesman said that the UK was "disappointed" with the ruling.

"We've consistently said we want tough financial regulation that works but any powers conferred on EU agencies must be consistent with the EU Treaties and ensure legal certainty," he said.

"We will now consider the judgment in detail and respond, in full, at a later date."

The case is the first of a series of legal challenges that the UK, which has Europe's largest financial services sector, has launched against EU regulation.

In 2013, the UK joined with Luxembourg to oppose plans by eleven EU countries to set up a financial transactions tax. It is also challenging new rules to cap bank bonuses.

Brussels to tame 'Wild West' derivatives and short-selling

In the latest part of its endeavour to bring an end to the light-touch regulatory climate that produced the economic crisis, the European Commission has proposed a series of rules intending to shine a light on the until-now murky trading in some of the market's more complicated financial practices: derivatives and short-selling.

EU miffed by unilateral German ban on short-selling

Germany's decision to place a unilateral ban on naked short-selling of eurozone sovereign debt instruments has drawn a frosty response from its EU partners, with the European Commission saying the move highlighted the need for a more co-ordinated regulatory approach.

EU rejects UK claim it's slowing Brexit talks

The EU is "not confident, but hopeful" that the UK will achieve sufficient progress for 'stage 2' by December, as Britain's Brexit negotiator blames the slow pace of negotiations on the EU ahead of a crucial summit meeting.

News in Brief

  1. Spanish Court declares Catalan referendum law void
  2. EU to keep 'Dieselgate' letter secret
  3. No deal yet on Mediterranean alliance for EU agencies
  4. EU Commission condemns Maltese journalist's murder
  5. Poland denies wrongdoing over forest logging
  6. Risk to asylum kids in EU increasing, says charity
  7. Schroeder warns of Turkey and Russia drifting towards China
  8. EU parliament wants equal pay for posted workers

Stakeholders' Highlights

  1. EU2017EENorth Korea Leaves Europe No Choice, Says Estonian Foreign Minister Sven Mikser
  2. Mission of China to the EUZhang Ming Appointed New Ambassador of the Mission of China to the EU
  3. International Partnership for Human RightsEU Should Seek Concrete Commitments From Azerbaijan at Human Rights Dialogue
  4. European Jewish CongressEJC Calls for New Austrian Government to Exclude Extremist Freedom Party
  5. CES - Silicones EuropeIn Healthcare, Silicones Are the Frontrunner. And That's a Good Thing!
  6. EU2017EEEuropean Space Week 2017 in Tallinn from November 3-9. Register Now!
  7. European Entrepreneurs CEA-PMEMobiliseSME Exchange Programme Open Doors for 400 Companies Across Europe
  8. CECEE-Privacy Regulation – Hands off M2M Communication!
  9. ILGA-EuropeHealth4LGBTI: Reducing Health Inequalities Experienced by LGBTI People
  10. EU2017EEEHealth: A Tool for More Equal Health
  11. Mission of China to the EUChina-EU Tourism a Key Driver for Job Creation and Enhanced Competitiveness
  12. CECENon-Harmonised Homologation of Mobile Machinery Costs € 90 Million per Year

Latest News

  1. EU rejects UK claim it's slowing Brexit talks
  2. Nepal troops arrive in Libya to guard UN refugee agency
  3. Is Banking Authority HQ the Brexit 'booby prize'?
  4. EU-Russia trade bouncing back - despite sanctions
  5. No sign of Brexit speed-up after May-Juncker dinner
  6. EU defence strategy 'outsourced' to arms industry
  7. EU privacy rules tilt to industry, NGO says
  8. Malta in shock after car bomb kills crusading journalist