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Britain's finance ministry has lodged papers at the European Court of Justice seeking legal clarity about powers that will give the European Securities and Markets Authority (ESMA) the power to ban or restrict short-selling across the 27-member bloc.
It argues that the new rules, due to take effect in November, will give ESMA undue influence and is citing a half-century old landmark case about the balance of institutional powers within the first incarnation the European Union. The UK insists that it supports the EU's markets watchdog and the short-selling regulations. But it wants to establish whether ESMA has the legal right to impose a short-selling ban and avoid countries questioning such decisions by the regulator during a crisis.
"All these lawsuits demonstrate how hopelessly outside the process Britain is. They are missing the magnitude of what's going on", said Graham Bishop, an adviser to the EU on financial regulation.