22 January 2014

ECJ（欧州司法裁判所）、EU（欧州連合）の空売り規制は合法と判示、英政府の訴えを棄却

The power of the European Securities and Markets Authority to adopt emergency measures on the financial markets of the Member States in order to regulate or prohibit short selling is compatible with EU law

In its judgement, the Court finds, first, that Article 28 of the regulation does not confer any autonomous power on ESMA that goes beyond the powers granted to that authority when it was created. The Court also points out that the exercise of the powers laid down in that provision is circumscribed by various conditions and criteria which limit ESMA’s discretion.

First, ESMA can adopt measures under the provision in question only if such measures address a threat to the financial markets or the stability of the EU’s financial system and there are cross-border implications. Moreover, all ESMA measures are subject to the condition that no competent national authority has taken measures to address the threat or one or more of those authorities have taken measures which have proven not to address the threat adequately.

Second, ESMA is required to take into account the extent to which such measures (i) address the threat to the financial markets or the stability of the financial system of the EU or (ii) significantly improve the ability of the competent national authorities to monitor the threat. ESMA must also ensure that such measures do not create a risk of regulatory arbitrage and do not have a detrimental effect on the efficiency of financial markets, including by reducing liquidity in those markets or creating uncertainty for market participants which is disproportionate to the benefits of the measure.

The Court also observes that ESMA is required to consult the European Systemic Risk Board and, if necessary, other relevant bodies. Furthermore, ESMA must notify the competent national authorities concerned of the measure it proposes to take. ESMA is also under a duty to review the measures at appropriate intervals (at least every three months), so that such measures may only be temporary. Moreover, the detailed delineation of the powers of intervention available to ESMA is apparent from the fact that the Commission is empowered to adopt delegated acts specifying criteria and factors to be taken into account by the competent authorities and ESMA in determining in which cases certain adverse events or developments and the threat to the financial markets or the stability of the EU’s financial system arise.

In those circumstances, the Court finds that the powers available to ESMA are precisely delineated and amenable to judicial review in the light of the objectives established by the authority which delegated those powers to it. The Court concludes that those powers are compatible with the FEU Treaty.

Second, the Court states that, as the FEU Treaty expressly permits EU bodies, offices and agencies to adopt acts of general application, ESMA is also entitled to adopt such acts.

Third, the Court finds that Article 28 of the regulation does not undermine the rules governing the delegation of powers laid down by the FEU Treaty. The Court observes that that provision, which vest ESMA with certain decision-making powers in an area which requires specific technical and professional expertise, cannot be considered in isolation. On the contrary, it must be perceived as forming part of a series of rules designed to endow the competent national authorities and ESMA with powers of intervention to cope with adverse developments which threaten financial stability within the EU and market confidence. To that end, those authorities must, inter alia, be in a position to impose temporary restrictions on the short selling of certain stocks and credit default swaps in order to maintain financial stability within the EU.

Fourth, the Court points out that Article 114 TFEU does not provide that the addressees of the measures adopted by the EU legislature on the basis of that provision can only be Member States. In that context, the Court states that, by the adoption of Article 28 of the regulation, the EU legislature sought to provide an appropriate mechanism to enable ESMA to adopt, as a last resort and in very specific circumstances, measures applicable throughout the EU, it being understood that those measures may take the form of decisions directed at certain participants in the financial markets. Moreover, Article 28 of the regulation is in fact directed, in keeping with the spirit of Article 114 TFEU, at the harmonisation of the Member States’ laws, regulations and administrative provisions relating to the supervision of a number of stocks and the monitoring, in specific situations, of certain commercial transactions concerning those stocks. Similarly, the purpose of the powers provided for in Article 28 of the regulation is to improve, in accordance with Article 114 TFEU, the conditions for the establishment and functioning of the internal market in the financial field. Accordingly, the Court finds that Article 114 TFEU constitutes an appropriate legal basis for the adoption of Article 28 of the regulation.

As all the pleas in law relied on by the United Kingdom have been rejected, the Court dismisses the action in its entirety.

Full press release

Greens MEP Sven Giegold published the following statement on his website (translated from the German):

"The verdict of the judges in Luxembourg is a great victory of common sense over eurosceptics from the UK. The European Parliament had fought in lengthy negotiations with the Council of Member States that unsecured short selling can be banned across Europe. The lawsuit against the corresponding decision-making powers of the European Financial Markets Authority ESMA has failed on all fronts. 

The ruling now enables the European legislator to establish further legally secure financial market regulations. Now it is clear: the European legislator can delegate sufficiently precise judgements to EU agencies who have the necessary European expertise. Especially in the area of financial market legislation, this strengthens the European democracy."

Full statement (in German)

Arlene McCarthy, Vice President of the ECON Committee, said: “The ECJ ruling is clear that the short selling rules do not compromise the sovereign right of British regulators to take national action and that ESMA can only act to defend the single market and only if there is a threat to European financial stability or if there are cross border implications.”

“With an estimated one million pounds spent per court case to the ECJ, this is a flagrant and frivolous waste of taxpayers’ money. It is time for this Government to get back to real diplomacy which in the past Britain excelled at.”

“If this Government continues to insist on running their European diplomacy through the ECJ, they will end up on the losing end. It is not the way to win friends and influence policy. They are failing to defend the national interest of the UK.”

Press release

Bloomberg reports that the outcome of the case may have an impact on how the EU must adopt other banking proposals. Britain’s tendency to turn to courts to settle regulation fights may cost the nation influence in the EU, Sven Giegold, a German lawmaker in the European Parliament’s Green group, said. “It’s like in sports, if you always go after the match to challenge decisions, then this doesn’t make you friends", he said. “You should raise this during the adoption process, and not wait until the very end, perhaps not even having clearly opposed the draft law.”

Britain’s drive to have the short-selling powers annulled received some backing in a non-binding opinion provided by one of the court’s senior advisers last year. Britain contests EU rules allowing Paris-based ESMA to introduce short-selling bans to protect the “integrity of financial markets". Under the law, ESMA can only act if a crisis has “cross-border implications” and national regulators have failed to deal with it.

Niilo Jaeaeskinen, one of the EU court’s advocates general, gave partial support to the UK in his opinion last year, saying that the voting methods used to adopt the short-selling regulation were flawed. Should the court uphold the adviser, it “would be a very significant development” with implications for other pieces of banking and market legislation, Alexandria Carr, a regulatory lawyer at Mayer Brown LLP in London, said.

A shift to unanimous decisions would entail linking the powers to a different article in the EU’s treaties, opening up the possibility that some EU nations, including the UK, might have to get approval from national voters to re-adopt the short-selling law, Carr said. Other EU measures that could be affected by this week’s ruling include plans by the bloc to build a centralised system, known as a Single Resolution Mechanism, to handle failing euro area banks, Carr said.

Further reporting

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