The UK has been dealt a fundamental blow in its bid to curb EU regulation of the financial services industry after it failed to overturn the right of the Paris-based European
Securities and Markets Authority (ESMA) to ban short selling in times of emergency.
The EU Court of Justice in Luxembourg threw out “in its entirety” the UK’s argument that emergency powers granted to ESMA were illegal and encroached unfairly on national regulations. The decision was greeted as “excellent news for those that believe that financial markets need to be regulated at the EU level” by Philippe Lamberts, a member of the European Parliament’s Green Group.
Meanwhile the UK Treasury said in a statement that: “We’ve consistently said we want tough regulation that works but any powers conferred on EU agencies must be consistent with the EU treaties and ensure legal certainty.”
The decision is the most significant yet for the UK in its ongoing resistance to the EU’s plans for financial regulation following its opposition to a cap on bankers’ bonuses and the idea of a financial transaction tax.
It may also encourage the European Parliament to give more powers to regulatory agencies such as ESMA while avoiding the need for a treaty negotiation, something which the UK has consistently argued in favour of.
The decision is also likely to increase the level of Euro-scepticism in the UK at a time when alarm has been raised by US bank JP Morgan over the UK government’s pledge to hold a referendum on membership of the EU in a submission to the UK Treasury that the UK could lose influence in the shaping of global regulatory rules if it were to exit the EU.
“The UK’s objectives for sensible outcomes to cross-jurisdictional disputes are more likely to be achieved as part of the EU, rather than via bilateral discussions,” wrote the bank.
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