The European securities and markets authority and institutional design for the EU financial market - A tale of two competences: Part (1) rule-making

European Business Organization Law Review

Volumn 12, Issue 1, 2011, Pages 41-86

  Moloney, Niamh ^a  

^a LONDON SCHOOL OF ECONOMICS   (United Kingdom)

Author keywords

EU; EU financial markets; European Securities and Markets Authority; financial crisis; investor protection; regulation of financial markets; supervision of financial markets

Indexed keywords

EID: 79959315934     PISSN: 15667529     EISSN: 17416205     Source Type: Journal    
DOI: 10.1017/S1566752911100026     Document Type: Article

References (219)

1. Regulation (EU) No 1095/2010, OJ 2010 L 331/84. The ESMA website is at: .
2. ESMA's first official publication took the form of a FAQ document: ESMA, Frequently Asked Questions. A Guide to Understanding ESMA (2011).
3. On ESMA, see further E. Ferran, 'Understanding the Shape of the New Institutional Architecture of EU Financial Market Supervision' (2010), available at:
4. E. Wymeersch, 'The Institutional Reforms to the European Financial Supervisory System', 7 European Company and Financial Law Review (2010) p. 1.
5. The companion piece to this article is forthcoming as N. Moloney, 'The European Securities and Markets Authority and Institutional Design for the EU Financial Market - A Tale of Two Competences: Part (2) Rules in Action', 12 European Business Organization Law Review (2011).
6. Respectively, Regulation (EU) No 1093/2010, OJ 2010 L 331/12, and Regulation (EU) No 1094/2010, OJ 2010 L 331/48.
7. This article focuses on the securities markets and does not consider the institutional reforms in the banking and insurance sectors, or the array of regulatory measures adopted in the banking/insurance spheres, including the revisions to the Capital Requirements Directive (CRD II (Directive 2009/111/EC, OJ 2009 L 302/97) and CRD III (Directive 2010/76/EU, OJ 2010 L 329/3)).
8. Regulation (EU) No 1090/2010, OJ 2010 L 331/1.
9. See further K. Alexander and E. Ferran, 'Can Soft Law Bodies Be Effective: The Special Case of the European Systemic Risk Board', 35 European Law Review (2010) p. 751.
10. Directive 2010/78/EU, OJ 2010 L 331/120.
11. A provisional proposal for an Omnibus Directive II has been published by the Commission (January 2011). It is concerned with the insurance sector, for the most part, although it makes some additional revisions to ESMA's powers under the prospectus regime.
12. The initial Lamfalussy Report was presented in November 2000 and the Commission Decision establishing CESR was adopted in June 2001.
13. COM(2009) 503 (ESMA);
14. COM(2009) 501 (EBA);
15. COM(2009) 502 (EIOPA);
16. COM(2009) 499 (ESRB). An Impact Assessment was also prepared (SEC(2009) 1234).
17. COM(2009) 252.
18. ECOFIN Meeting, 2 December 2009: 16571/1-09 (ESMA); 16748/109 (EBA);
19. 16749/1/09 (EIOPA). ECOFIN Meeting, 20 October 2009: 14491/1/09 (ESRB).
20. Parliament Debate 6 July 2010 outcomes: T7-0270/2010 (ESMA);
21. T7-0272/2010 (EBA);
22. T7-0273/2010 (EIOPA);
23. T7-0271 (ESRB). ECOFIN adopted a political approach on 13 July 2010 on aspects of the EBA proposal which are critical to the negotiations across all three ESAs: 11669/10.
24. Report from the Presidency to the Council, 6 September 2010, Proposal for a Regulation of the European Parliament and the Council establishing a European Banking Authority - Presidency Compromise Text (13070/1/10 Rev 1).
25. Report from the Presidency to the Council on Financial Supervision Reforms (13179/10), 6 September 2010.
26. ECOFIN Meeting, 7 September 2010: 13161/10.
27. P7-TA-PROV(2010)0339.
28. ECOFIN Meeting, 17 November 2010: 16369/10.
29. OJ 2010 L 331/84.
30. Gielgold Report (PE438.409v01-00).
31. Many of these discussions were not resolved during the critical July 2010 ECOFIN and Parliament meetings (N. Tait, 'Oversight Reform Given Backing', Financial Times, 8 July 2010, p. 5)
32. continued in the summer 2010 trilogue, with concern persisting in many Member States with respect to ESMA intervention in firms and sharp differences between the European Parliament and the Council as to the extent to which supervision should be centralised: e.g., R. Sullivan, 'Anxiety Grows over New Powers for ESMA', Financial Times, Fund Management Supplement, 19 July 2010, p. 3.
33. E.g., E. Wymeersch, 'The Structure of Financial Supervision in Europe: About Single Financial Supervisors, Twin Peaks and Multiple Financial Supervisors', 8 European Business Organization Law Review (2007) p. 237
34. P.-M. Boury, 'Does the European Union Need a Securities and Exchange Commission', 1 Capital Markets Law Journal (2006) p. 184;
35. D. Langevoort, 'Structuring Securities Regulation in the European Union: Lessons from the US Experience', in G. Ferrarini and E. Wymeersch, eds., Investor Protection in Europe. Corporate Law Making, the MiFID and Beyond (Oxford, OUP 2006) p. 485;
36. R. Lastra, 'The Governance Structure for Financial Regulation and Supervision in Europe', 10 Columbia Journal of European Law (2003) p. 49;
37. G. Hertig and R. Lee, 'Four Predictions about the Future of EU Securities Regulation', 3 Journal of Corporate Law Studies (2003) p. 359;
38. E. Pan, 'Harmonization of USEU Securities Regulation: The Case for a Single European Securities Regulator', 34 Law and Policy of International Business (2003) p. 499.
39. See, e.g., N. Moloney, 'EU Financial Market Regulation after the Financial Crisis: "More Europe" or More Risks?', 47 Common Market Law Review (2010) p. 1317;
40. W. Fonteyne, et al., 'Crisis Management and Resolution for a European Banking System', IMF Working Paper WP/10/10 (2010), available at: .
41. G. Ferrarini and F. Chiodini, 'Regulating Multinational Banks in Europe. An Assessment of the New Supervisory Framework', ECGI Law Working Paper 158/2010 (2010), available at: ;
42. M. Dabrowski, 'The Global Financial Crisis: Lessons for European Integration' (2009), available at: ;
43. S. Cotterli and E. Gualandri, 'Financial Crisis and Supervision of Cross Border Groups in the EU' (2009), available at: .
44. For the EU institutional view, see High-Level Group on Financial Supervision, Report (2009) (the DLG Report);
45. Economic and Finance Committee (EFC), High-Level Working Group on Cross-Border Financial Stability Arrangements, Lessons from the Financial Crisis for European Financial Stability Arrangements (2009).
46. Fiscal consequences were a frequent feature of the policy debate on the ESAMs. E.g., N. Tait and B. Masters, 'Big Promises Fail to Dispel Prosaic Doubts', Financial Times, 24 September 2009, p. 6, quoting Commission President Barosso.
47. Although the UK had previously supported an evolutionary, convergence-based model for supervision over the course of the earlier 2007 Lamfalussy Review (e.g., FSA and HM Treasury, Strengthening the EU Regulatory and Supervisory Framework: A Practical Approach (2007))
48. it broadly supported the DLG Report model: FSA, The Turner Review. A Regulatory Response to the Global Banking Crisis (2009), at pp. 101-102.
49. On the interest groups dynamics of the evolution of the UK's position, see J. Buckley and D. Howarth, 'Internal Market Gesture Politics? Explaining the EU's Response to the Financial Crisis', 48 Journal of Common Market Studies (2010) p. 119.
50. COM(2009) 114.
51. Brussels European Council Conclusions, 18-19 June 2009.
52. OJ 2010 C 9E/48.
53. E.g., M. Thatcher and D. Coen, 'Network Governance and Multi-level Delegations. European Networks of Regulatory Agencies', 28 Journal of Public Policy (2008) p. 49.
54. K. Hopt, 'European Company and Financial Law: Observations on European Politics, Protectionism, and the Financial Crisis', in U. Bernitz and W.-G. Ringe, eds., Company Law and Economic Protectionism (Oxford, OUP 2010) p. 13, at p. 19, describing MiFID, the centrepiece of the FSAP, as a 'real breakthrough' in terms of financial law harmonisation.
55. N. Moloney, EC Securities Regulation, 2nd edn. (Oxford, OUP 2008), at pp. 1009-1101.
56. For a relatively early examination of supervision, in the UK context, see H. Evans, 'Plumbers and Architects. A Supervisory Perspective on International Financial Architecture', FSA Occasional Paper Series 4 (2000).
57. E.g., European Commission, 'Review of the Lamfalussy Process. Strengthening Supervisory Convergence' (2007) (COM(2007) 727).
58. MEMO/10/436.
59. European Parliament, Press Release 20100921PR83190.
60. FSA, Working towards Effective and Confident European Supervisory Authorities. The FSA's Views on Policy Considerations (2010).
61. E.g., the FSA's stated preference for non-binding mediation, despite ESMA's binding mediation powers under Art. 19, the concern that binding technical standards (which ESMA may propose) for colleges of supervisors not be detailed, and the acute concern with respect to the exercise of ESMA's emergency decision-making powers: ibid., at pp. 8, 10, and 11.
62. The FSA called, e.g., for a risk-based and outcomes-based approach, and for local authorities to play a key role in ESMA working groups: ibid., at pp. 3-5.
63. Generally, L. Enriques, 'Regulators' Response to the Current Crisis and the Upcoming Reregulation of Financial Markets: One Reluctant Regulator's View', 30 University of Pennsylvania Journal of International Law (2009) p. 1147.
64. E.g., House of Commons, Treasury Select Committee, 16th Report 2008-2009, The Committee's Opinion on Proposals for European Financial Supervision, 2008-2009, Commission written evidence; ESMA Regulation, recs. 29 and 32.
65. ESMA FAQ, at p. 9.
66. N. Moloney, 'CESR and Supervisory Convergence at Level 3 of the Lamfalussy Process', in M. Tison, H. de Wulf, R. Steenort and C. Van der Elst, eds., Perspectives in Regulation and Corporate Governance (Cambridge, CUP 2009) p. 449.
67. ESMA, Work Programme for 2011 (2011).
68. ESMA FAQ, at p. 9.
69. E.g., J. Armour, B. Black, B. Cheffins and R. Nolan, 'Private Enforcement of Corporate Law: An Empirical Examination of the UK and US', 6 Journal of Empirical Legal Studies (2009) p. 701;
70. H. Jackson and M. Roe, 'Public and Private Enforcement of Securities Laws: Resource- Based Evidence', 93 Journal of Financial Economics (2009) p. 207;
71. E. Ferran and K. Cearns, 'Non-Enforcement-Led Public Oversight of Financial and Corporate Governance Disclosure and of Auditors', 8 Journal of Corporate Law Studies (2008) p. 191;
72. S. Djankov, R. La Porta, F. Lopezde- Silanes and A. Shleifer, 'The Law and Economics of Self Dealing', 88 Journal of Financial Economics (2008) p. 430;
73. J. Coffee, 'Law and the Market: The Impact of Enforcement', 156 University of Pennsylvania Law Review (2007) p. 229;
74. R. La Porta, F. Lopez-de-Silanes and A. Shleifer, 'What Works in Securities Laws', 61 Journal of Finance (2006) p. 1.
75. E.g., J. Gray and J. Hamilton, Implementing Financial Regulation. Theory and Practice (Chichester, John Wiley & Sons 2006)
76. J. Black, 'The Emergence of Risk-based Regulation and the New Public Risk Management in the UK', Public Law (2005) p. 512.
77. J. Black, 'Mapping the Contours of Contemporary Financial Services Regulation', 2 Journal of Corporate Law Studies (2002) p. 253.
78. European Commission, White Paper on Financial Services Policy 2005-2010 (COM(2005) 629).
79. The earliest securities measures in the 1970s and 1980s provided for Contact Committees to encourage supervisory cooperation and monitor directives, while the 1993 Investment Services suggested (but did not provide for) the establishment of a 'securities committee'.
80. The current agenda is set out in European Commission, 'Regulating Financial Services for Sustainable Growth' (2010) (COM(2010) 301).
81. Regulation (EC) No 1060/2009, OJ 2009 L 302/1 (CRA Regulation).
82. P7-TA(2010)0393 (AIFMD Proposal). Formal ECOFIN approval is expected shortly. References to the 2010 AIFMD Proposal are to this (.political agreement; Parliament first reading) text rather than the Commission Proposal (COM(2010) 289), unless otherwise indicated.
83. P7-TA(2010) 0478 (2010 CRA Proposal). Formal ECOFIN approval is expected shortly. References to the 2010 CRA Proposal are to this text (.political agreement; Parliament first reading) rather than the Commission Proposal (COM(2010) 289), unless otherwise indicated.
84. COM(2010) 482.
85. COM(2010) 484 (OTC Derivatives Proposal).
86. COM(2010) 289.
87. The Commission's first major policy orientations on the MiFID Review were published in December 2010: European Commission, Public Consultation. Review of the Markets in Financial Instruments Directive (MiFID) (MiFID Review).
88. Directive 2010/73/EU, OJ 2010 L 327/1.
89. The Omnibus Directive, e.g., refers to the 'development of a single rule book to ensure consistent harmonisation and uniform application': rec. 8.
90. Including key delegations with respect to the initial capital regime, conflict of interest management, risk management, organisational requirements, valuation, delegation conditions, the depositary regime, the disclosure regime and the regime governing limits on leverage.
91. Including with respect to the SME disclosure regime, the format and content of the retail summary prospectus, and the determination of equivalence under the Directive. A Commission mandate to ESMA for advice was speedily issued in January 2011: Ref.Ares(2011) 56961.
92. European Commission, Consultation on the modernisation of the Transparency Directive (2010), at pp. 11-12.
93. ESC Minutes, 69th Meeting, 8 March 2010;
94. MiFID Review, at p. 76.
95. CESR/10-417
96. MiFID Review, at p. 7.
97. CESR/10-394;
98. MiFID Review, at p. 23.
99. European Commission, Public Consultation on Credit-Rating Agencies, 5 November 2010, at p. 5, including 'an independent European credit rating agency' among the list of policy options.
100. CESR/10-928 and 10-331.
101. CESR, Annual Report (2009), at p. 4.
102. CESR/09-589.
103. L. Enriques, 'EC Company Law Directives and Regulations: How Trivial Are They', 27 University of Pennsylvania Journal of International Economic Law (2006) p. 1.
104. E.g., L. Quaglia, R. Eastwood and P. Holmes, 'The Financial Turmoil and EU Policy Cooperation in 2008', 47 Journal of Common Market Studies (2009) p. 63.
105. E.g., S. Lavrijssen and L. Hancher, 'European Regulators in the Network Sectors. Revolution or Evolution' (2008), available at: .
106. E.g., J. Black, 'Restructuring Global and EU Financial Regulation: Capacities, Coordination and Learning' (2010), LSE Law, Society and Economy Working Paper Series, WPS 18-2010, available at: .
107. E.g., D. Zaring, 'International Institutional Performance in Crisis', 10 Chicago Journal of International Law (2009-2010) p. 475
108. C. Brummer, 'How International Financial Law Works (and How It Doesn't)' (2010), available at: .
109. E.g., R. Weber, 'Multilayered Governance in International Financial Regulation and Supervision', 13 Journal of International Economic Law (2010) p. 683.
110. E.g., E. Pan, 'Four Challenges to Financial Regulatory Reform', 55 Villanova Law Review (2009) p. 101.
111. E.g., E. Wymeersch, Control of Securities Markets in the European Economic Community, Collection Studies. Competition - Approximation of Legislation Series No. 31 (Brussels, European Commission 1977)
112. R. Buxbaum and K. Hopt, Legal Harmonisation and the Business Enterprise (Berlin, De Gruyter 1988).
113. E.g., A. Haldane (Bank of England), 'Rethinking the Financial Network' (2009), available at:
114. A. Lo, 'Regulatory Reform in the Wake of the Financial Crisis of 2007-2008' (2009), available at:
115. E. Avgouleas, 'The Global Financial Crisis, Behavioural Finance and Financial Regulation. In Search of a New Orthodoxy', 9 Journal of Corporate Law Studies (2009), at p. 23.
116. BME Consulting, The EU Market for Consumer Long-Term Retail Savings Vehicles. Comparative Analysis of Products, Market Structure, Costs, Distribution Systems, and Consumer Savings Patterns (2007).
117. COM(2009) 491, at p. 2.
118. The 2010 Directive, however, simply provides for a review of the home state regime for debt offers (rec. 8).
119. European Commission, Public Consultation on a Revision of the Market Abuse Directive (MAD), 26 June 2010.
120. CESR/10-394
121. MiFID Review, at p. 19.
122. MiFID Review, at pp. 19-20.
123. MiFID Review, at p. 9.
124. CESR/10-109b
125. MiFID Review, at pp. 12-14.
126. CESR/10-799
127. MiFID Review, at p. 27.
128. COM(2010) 482, Art. 2(1).
129. C(2010) D009287/01.
130. The reports are available at: .
131. Ref.Ares(2010) 549585.
132. Ref.Ares(2010) 108790.
133. A second report, which reiterated many of the earlier concerns, followed the new Impact Assessment (Ref. Ares(2010) 205437).
134. D(2009) 2340 and D(2009) 2748, respectively.
135. The colleges of supervisors model adopted initially under the 2009 CRA Regulation, which is being replaced by an ESMA supervision model, was a compromise given the need to comply speedily with G20 obligations concerning rating agencies: Commission Impact Assessment for the 2010 Credit Rating Proposal (SEC(2010) 678), at p. 7.
136. The 2010 Rating Agency Proposal, e.g., adopts the US SEC's model for easing rating agency access to issuer information on structured finance instruments: COM(2010) 289. Similar dynamics may have been at play with respect to the recent CRD III reforms to pay in CRD-scope institutions, which are regarded as the toughest regime internationally.
137. The Short-Selling Proposal and the Commission Communication on rating agencies (with respect to a harmonised liability regime) both make reference to recent US developments.
138. For an examination of the engagingly termed 'modified battle of the sexes', in which authorities seek to impose their standards internationally, see C. Brummer, 'Post- American Securities Regulation' (2010), available at: .
139. Committee on Capital Market Regulation, Interim Report (2006).
140. N. Moloney, 'Financial Services and Markets', in R. Baldwin, M. Cave and M. Lodge, eds., Oxford Handbook on Regulation (Oxford, OUP 2010) p. 437.
141. E. Ferran, Building an EU Securities Market (Cambridge, CUP 2004).
142. European Commission, Consultation Document on the modernisation of Directive 2004/109/EC, May 2010 (based on the Commission's earlier report to the institutions on the operation of the Directive (COM(2010) 243)).
143. Generally, N. Moloney, How to Protect Investors. Lessons from the EU and the UK (Cambridge, CUP 2010).
144. Where more than one authority is relevant in a Member State, the different national authorities must agree as to which authority sits on the Board of Supervisors (Art. 40(4)); representation may be changed where the subject under discussion is not within the competence of the agreed representative.
145. BTS/guidance activities (Arts. 10-16) and the power to prohibit temporarily products and services are subject to a qualified majority vote. Special 'blocking minority' rules apply to the Art. 19 power to impose decisions on supervisors in cases of disagreement and in the particular case of mediation concerning colleges of supervisors and consolidating supervisors.
146. Formally, the Management Board is to ensure that ESMA carries out its mission and performs the tasks assigned to it, propose work programmes and annual reports, adopt staffing policy and exercise budgetary powers.
147. Although the Chairperson is appointed by the Board of Supervisors on the basis of merit, skills, knowledge and experience, based on an open selection procedure (Art. 48), the Parliament may object to the appointee following a hearing, and the first Chairperson was to be selected from a shortlist drawn up by the Commission (rec. 55); the shortlist review procedure is, however, to be reviewed.
148. ESMA FAQ, at p. 9.
149. ESMA FAQ, at p. 11.
150. Including an annual report to the Commission, Parliament, Council, Court of Auditors and ECOSOC (Art. 43(5)). Work programmes must also be submitted to these institutions for information. The ESMA Chair may be invited to make a statement by the Parliament or Council and must report on the main activities of ESMA to the Parliament when requested (Art. 50).
151. ESMA is to act independently and objectively and in the interest of the Union alone (Art. 1(6)).
152. Arts. 42, 46, 49, 52 and 59. The independence guarantee (save for the Board of Appeal provision) is cast in terms of the actor acting independently and objectively in the interest of the EU as a whole and not seeking or taking instructions from EU bodies or institutions, any Member State government or any other public or private body. Similarly, neither the Member States, EU institutions or bodies, nor any other public or private body are to seek to influence the actor in question.
153. Decision C(2009) 176 (now repealed), Art. 1.
154. The obligation on the Chairperson to report to the Council and Parliament, for instance, is subject to the institutions fully respecting the Chairperson's independence (Art. 50(1)).
155. Case C-11/00 Commission v. ECB [2003] ECR I-7147.
156. Under Art. 8(1) ESMA is to: contribute to the development of high-quality common regulatory and supervisory standards and practices; contribute to the consistent application of legally binding EU acts (including through supporting a common supervisory culture, preventing regulatory arbitrage, mediating between supervisors, acting in emergency situations and ensuring the coherent functioning of colleges of supervisors); stimulate and facilitate delegation by competent authorities; cooperate with the ESRB; engage in peer review; monitor and assess market developments; undertake economic analyses of markets; foster investor protection; and engage in a range of tasks concerned with the support of colleges of supervisors and crisis resolution.
157. Under Art. 8(2) ESMA is empowered to: develop binding technical standards; issue guidelines and recommendations; issue specific recommendations; take individual decisions addressed to competent authorities in nominated cases; take individual decisions addressed to financial market participants in nominated cases; issue opinions to the EU institutions; collect information; develop methodologies concerning the assessment of products and distribution processes; and maintain databases.
158. ESMA FAQ, at p. 3.
159. E.g., Arts. 9(1) (consumer trends), 23 (systemic risk), 32 (assessment of market conditions and risks generally) and 35 (general information-gathering powers).
160. It suggested, in the context of the MiFID Q and A project, that while its guidance was not legally binding, its 'legal effects' could include: being used by courts and tribunals in interpreting level 1 and 2 measures; being 'of relevance' in enforcement action taken by a competent authority; and 'creating relevant considerations and legitimate expectations', particularly with respect to the predictability of actions taken by competent authorities: CESR, MiFID Level 3 Work Plan for Q4 2007-2008 (2008) (CESR/07-704c), at p. 3.
161. ESMA FAQ, at p. 5.
162. From the crisis-era measures, e.g., OTC Derivatives Proposal, Art. 50 (on interoperability), Rating Agency Proposal, Art. 21 (on the endorsement regime), and AIFMD Proposal, Art. 9a (on the remuneration regime applicable to alternative investment fund managers). Under the Omnibus Directive, rec. 34 (MiFID) (with respect to the reputation and experience requirements which apply to investment firm management).
163. Art. 290 TFEU delegations are governed by the provisions set out in the relevant delegating measure. The Commission's 2009 Communication on Art. 290 reinforces the discretion of the colegislators with respect to each measure, but sets out appropriate model language. It also acknowledges the Commission's practice of consulting with experts appointed by the Member States in the financial services area: COM(2009) 673.
164. Omnibus Directive, rec. 21, and Proposal for Omnibus Directive II, rec. 27.
165. The Short-Selling Proposal, e.g., confers on the Commission power to adopt rules which amplify key definitions, subject to a European Parliament and Council veto and assistance by the European Securities Committee (Arts. 2(2), 37 and 38). The Rating Agency Proposal confers the Commission with power to adopt rules with respect to equivalence decisions, fees, fines and penalties, and revisions to the Annexes to the Regulation, and in accordance with the same procedures (Arts. 37-38c). The 2010 Prospectus Directive model for Commission rule-making is similarly based on advice from ESMA, consultation with the ESC, and Council/Parliament veto powers: supra n. 67.
166. COM(2010) 83.
167. E.g., ECON Report on the 2010 Rating Agency Proposal (Amendment 37).
168. The AIFMD Proposal, by contrast, contains extensive delegations to Commission delegated rule-making.
169. Regulatory capacity has been described as the ability of an actor to further regulatory goals and resolve problems and is characterised in terms of information, expertise, financial and economic resources, authority and legitimacy, strategic position and organisational capacity: Black, supra n. 49.
170. Similarly, matters governed by technical standards are to be 'genuinely technical ⋯ develop, specify and determine the conditions for consistent harmonisation of the rules included in basic instruments ⋯ [and] not involve policy choices': Omnibus Directive, rec. 12.
171. The technical level 2 rules on the UCITS 'eligible assets' regime, for instance, have had considerable implications for the design of the UCITS product and the widening of the UCITS brand.
172. Omnibus Directive, Art. 5(1) and (7).
173. Omnibus Directive, Art. 5(2).
174. On the approval process, see P. Schammo, 'The Prospectus Approval System', 7 European Business Organization Law Review (2007) p. 501.
175. E.g., N. Moloney, 'Confidence and Competence: The Conundrum of EC Capital Markets Law', 4 Journal of Corporate Law Studies (2004) p. 1
176. H. van Meerten and A. Ottow, 'The Proposals for the European Supervisory Authorities: The Right (Legal) Way Forward?' (2009), available at: .
177. E.g., Case C-66/04 United Kingdom v. Parliament and Council [2005] ECR I-10533.
178. Case C-233/94 Commission v. Germany [1997] ECR 1-2405.
179. Kokott AG, by contrast, advised that the ENISA Regulation be annulled as ENISA's contribution to the approximation of laws was not clear.
180. Art. 114 also allowed a more ambitious model to be pursued given that veto powers did not apply: K. Lannoo, 'The Road Ahead after de Larosière', CEPS Policy Brief No 195/7 (2009).
181. Ferran highlights the emergence of a post-crisis trend towards twin peaks supervision (based on an institutional separation between conduct of business and prudential supervisors;
182. HM Treasury, A New Approach to Financial Regulation: Judgement, Focus and Stability (2010).
183. Although the Review called for primary responsibility for supervision to be retained at national level, it supported more intense cooperation with respect to cross-border firms and processes for defining supervisory standards and for peer review.
184. Although fears have been expressed that fragmenting the FSA into two authorities could 'leave the UK with a muted voice in Europe': P. Jenkins, 'FSA Reform Risks Nation's Voice in Europe, Says MEP', Financial Times, 5 October 2010, p. 2.
185. Case 9/56, Meroni v. High Authority [1957-1958] ECR 133.
186. E.g., D. Curtin, 'Holding (Quasi-)Autonomous EU Administrative Actors to Public Account', 13 European Law Journal (2007) p. 523
187. D. Geradin and A. Petit, 'The Development of Agencies at EU and National Levels: Conceptual Analysis and Proposals for Reform' (2004), Jean Monnet Working Paper 01/04, at pp. 42-43.
188. The ESAs have been characterised as agencies in that they will have legal personality, be 'relatively independent', and will be established under secondary EU law: S. Griller and A. Orator, 'Everything in Control? The Way Forward for European Agencies in the Footsteps of the Meroni Doctrine', 35 European Law Review (2010) p. 3, at pp. 7-9.
189. They have, however, been characterised as a 'genuinely different arrangement': E. Chiti, 'An Important Part of the EU's Institutional Machinery: Features, Problems and Perspectives of European Agencies', 46 Common Market Law Review (2009) p. 1395, at p. 1431.
190. Art. 290 TEU provides that the Parliament and Council may delegate to the Commission the power to adopt delegated acts which supplement or amend non-essential elements of legislative acts. The relevant legislative act is to lay down the conditions to which the delegation is subject in terms of a right to revoke the delegation or to object to the delegated act.
191. J.-C. Piris, The Lisbon Treaty. A Legal and Political Analysis (Cambridge, CUP 2010), at p. 103.
192. J. Chaffin and P. Spiegel, 'MEPs Turn New Clout at Fiscal Reform', Financial Times, 27 October 2010, p. 12.
193. European Parliament Press Release, 20110203IPR13128. The release noted that the Council was 'roundly criticised' during the plenary debate.
194. Omnibus Directive, recs. 11-13.
195. ESMA FAQ, at pp. 4-5.
196. ESMA FAQ, at p. 5.
197. E. Avgouleas, 'A New Framework for the Global Regulation of Short Sales: Why Prohibition Is Inefficient and Disclosure Insufficient' (2009), available at:
198. The information transmittal obligations are extensive. Under the Short-Selling Proposal, for instance, ESMA must be notified of: the short-selling and CDS notifications made to competent authorities (Art. 11);
199. Prohibition decisions and other enforcement measures, before the decision is intended to take effect (Art. 22); and cooperation agreements with third countries (Art. 32). Under earlier measures, the Prospectus Directive, e.g., now requires, inter alia, that prospectus approval decisions and transfers of home authority approval powers are notified to ESMA (Omnibus Directive, Art. 5(5)).
200. The MAD, e.g., now requires that ESMA be provided with aggregated information concerning all administrative measures and sanctions imposed (Omnibus Directive, Art. 3(4)), as does MiFID (Omnibus Directive, Art. 6(18)).
201. ESMA's initial activities in January 2011 suggest a concern to establish a strong international presence. It wrote to the SEC to express its concerns at proposed SEC rules concerning Swap Data Repositories (ESMA/2011/16). While this work stream represents a continuation of CESR's activities, it nonetheless also suggests a concern to maintain a high profile for ESMA internationally.
202. For a recent discussion, and with reform proposals, see L. Enriques and G. Hertig, 'The Governance of Financial Supervisors, Improving Responsiveness to Market Developments' (2010), available at: .
203. ESA Impact Assessment, at pp. 6 and 53.
204. ESMA FAQ, at p. 13.
205. ESMA FAQ, at p. 11.
206. D. Langevoort, 'The SEC as a Lawmaker: Choices about Investor Protection in the Face of Uncertainty', 84 Washington University Law Review (2006) p. 1591.
207. 2009 UCITS Directive 2009/65/EC, OJ 2009 L 302/32
208. Commission Regulation 583/2010/EU, OJ 2010 L 176/1.
209. E.g., 12th CESR Prospectus FAQ, November 2010 (CESR/10-1337), Q. 56.
210. CESR/10-1040.
211. For an analysis of similar deterrent factors, or the 'shadow of hierarchy' in the EU environmental law factor sphere, see A. Héritier and D. Lehmkuhl, 'The Shadow of Hierarchy and New Modes of Governance', 28 Journal of Public Policy (2008) p. 1.
212. CESR/10-802. This approach has been reflected in the MiFID Review (at pp. 32-36).
213. CESR/10-109b.
214. CESR Charter, Art. 6.
215. As illustrated by recent versions of the CESR FAQ on prospectuses, which show an increasing tendency for supervisory authorities to adopt a uniform approach: CESR, Annual Report (2009), at p. 50.
216. The ESMA website states that: 'ESMA, its standing committees and networks work in an open and transparent manner, and will consult extensively, and at an early stage, with market participants, consumers and end-users.' 208 Supra nn. 189 and 190.
217. The 2009 CESR Annual Report, e.g., details the extensive 3L3 work plan, including a joint submission to the Commission on the packaged retail investment products reform: at pp. 72-80.
218. The ESMA FAQ notes its role in fostering supervisory convergence by working closely with the other ESAs: at p. 3.
219. The DLG Report notes the possibility of movement towards a twin peaks model (supra n. 20, at p. 58), while the ESMA Regulation provides for a review of the sectoral model (Art. 81).