Competition and Co-operation between Stock Exchanges in Europe – Legal Aspects and Challenges

European Business Organization Law Review

Volumn 3, Issue 2, 2002, Pages 371-402

  Clausen, Nis Jul ^a   Sorensen, Karsten Engsig ^a  

^a UNIVERSITY OF SOUTHERN DENMARK   (Denmark)

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EID: 84922904240     PISSN: 15667529     EISSN: 17416205     Source Type: Journal    
DOI: 10.1017/S1566752900000951     Document Type: Article

References (99)

1. Cf. further COM (85) 310, para. 107.
2. Cf. Directive 79/279/EEC, OJ [1979] L 66/21
3. amended by Directive 82/148/EEC, OJ [1982] L 62/22.
4. Cf. Directive 80/390/EEC, OJ [1980] L 100/1.
5. Cf. Directive 87/345/EEC, (OJ [1987] L 185/81.
6. Cf. Directive 82/121/EEC, OJ [1982] L 48/26
7. Directive 88/627/EEC, OJ [1988] L 348/62.
8. The five directives just mentioned have now been consolidated in one directive, cf. European Parliament and Council Directive 2001/34/EC on the admission of securities to official stock exchange listings and on the information to be published on those securities, OJ [2001] L 184/1. The new Admission and Information Directive does not make any substantial changes to the original directives.
9. Cf. Directive 89/592, OJ [1989] L 334/30.
10. For a critical remark on the method, see Benn Steil (ed.), The European Equity Markets, The State of the Union and an Agenda for the Millennium (European Capital Markets Institute 1996) 114
11. Guido Ferrarini, “Towards a European Law of Investment Services and Institutions”, 31 Common Market Law Review (1994) 573.
12. For further information on the British regulation and its consequences, see Steil, Common Market Law Review n. 8, p. 4
13. Marco Pagano, “The Changing Microstructure of the European Equity Markets”, in: Guido Ferrarini (ed.), European Securities Markets, The Investment Services Directive and Beyond (Kluwer Law International, 1998) 179
14. Brian Scott-Quinn, “EC Securities Markets Regulation”, in: Benn Steil (ed.), International Financial Market Regulation (Wiley 1994) 124.
15. Cf. Directive 93/6/EC, OJ [1993] L 141/1
16. Directive 93/22/EC, OJ [1993] L 141/27.
17. Cf. Benn Steil, in: Prerequisites for Increasing Nordic and Nordic-Baltic Securities Market Co-operation, TemaNord 1999:576 (a report commissioned by the Nordic Council of Ministers) (Copenhagen: Nordisk ministerrad) at p. 25.
18. cf. Steil, Prerequisites for Increasing Nordic and Nordic-Baltic Securities Market Co-operation, TemaNord n. 8, p. 128
19. Guido Ferrarini, “The European Regulation of Stock Exchanges: New Perspectives”, 36 Common Market Law Review (1999) 569, at p. 585.
20. For a more detailed discussion of this problem, see Kerry J. Houghton, “The Economic and Political Debate Over the Regulation of Off-Exchange Securities Trading in the European Community's Single Financial Market”, 32 Virginia Journal of International Law (1992) 747–782
21. Steil, Virginia Journal of International Law n. 8, at p. 116.
22. Cf.COM (1999) 232.
23. These proposals will improve the mobility of companies and it must be assumed that the European securities market will be further integrated. The first step in this direction was taken with the Council's adoption of the European Company Statute on 8 October 2001. See Regulation 2157/2000, OJ [2001] L 294/1.
24. For a discussion of the European Company Statute, see Christian Roth, Is the European Public Limited-Liability Company announcing the European Private Company? (The European Legal Forum 2000) at p. 396
25. Sorika Pluskat, “Die neuen Vorschlage fur die Europäische Aktiengesellschaft”, Europaische Zeitschrift fur Wirtschaftsrecht (2001) 524
26. Peter Hommelhoff, “Einige Bemerkungen zur Organisationsverfassung der Europaischen Aktiengesellschaft”, Die Aktiengesellschaft (2001) 279–288.
27. The fourth report was published in June 2001, COM (2001) 286.
28. See the Final Report of the Committee of Wise Men on the Regulation of European Securities Markets of 15 February 2002.
29. See Gérard Hertig, “Regulatory Competition in EU Financial Services”, in: Daniel C. Esty & Damien Geradin (eds.), Regulatory Competition and Economic Integration (Oxford University Press 2001) pp. 218–240. It is especially the American literature which has analysed this problem.
30. See, in general, Roberta Romano, “Empowering Investors: A Market Approach to Securities Regulation”, 107 Yale Law Journal (1998) 2359
31. Steven Huddard, John S. Hughes and Markus Brunnermeier, “Disclosure requirements and stock exchange listing choice in an international context”, 26 Journal of Accounting and Economics (1999) 237
32. Davis Charny, “Competition among Jurisdictions in Formulating Corporate Law Rules: An American Perspective on the ‘Race to the Bottom’ in the European Communities”, 32 Harvard International Law Journal (1991) 423
33. Merritt B. Fox, “Securities Disclosure in a Globalizing Market: Who Should Regulate Whom”, 95 Michigan Law Review (1995) 2498
34. Amir N. Licht, “Managerial Opportunism and Foreign Listing: some direct evidence”, 22 University of Pennesylvania Journal of International Economic Law (2001) 325–347.
35. The USA has a federal body - SEC -which issues stock exchange regulation and, therefore, today there is only a limited possibility of regulatory competition. It has been considered whether the EU should have a similar central regulation body, but so far most scholars reject this idea, cf. the discussion in Scott-Quinn, University of Pennesylvania Journal of International Economic Law n. 9, at pp. 151–154
36. Steil, University of Pennesylvania Journal of International Economic Law n. 8, at pp. 134–136.
37. Ruben Lee, “Supervising EU Capital Markets”, in: Richard M. Buxbaum, Gerard Hertig, Alain Hirsch and Klaus J. Hopt (eds.), European Economic and Business Law, Legal and Economic Analyses on Integration and Harmonization (de Gruyter 1996) 187–204.
38. Cf. Nis Jul Clausen, “Securities markets co-operation: a new regulatory standard in the next millenium”, 21 The Company Lawyer (2000) 43.
39. See further Nis Jul Clausen, Michael Møller, Claus Parum and Karsten Engsig Sørensen, “Capital Markets and Stock Exchanges in the Baltic Sea Region - Consequences of stock market concentration in Europe for the Baltic Sea Region - How to ensure an efficient and adequate capital allocation as a driver of transition in an enlarged Europe” (www.bdforum.org 2000) p. 4 and pp. 9–14.
40. See also Elroy Dimson, Paul Marsh and Mike Staunton, Triumph of the Optimists -101 years of global investment returns (Princeton University Press 2002) p. 12, showing almost similar figures for the world stock markets at the beginning of 2000.
41. For an account of some of the legal issues involved in the (intended) establishment of iX, see Siegfried Kümpel and Horst Hammen, “Zur Genehmigungsfähigkeit eines geplanten Börsenberbundes”, WM (2000) Sonderbeilag 3 zu Heft 40, pp. 3–23
42. Uwe H. Schneider and Ulrich Burgard, “Börsenrechtliche Bewertung einer Einbeziehung der Trägergesellschaft derFrankfurter Werpapierbörse in einen multinationalen Börsenkonzern und dieVerlagerung des Handels in Standardwerten an eine andere Börse”, WM (2000) Sonderbeilag 3 zu Heft 40, pp. 25–45
43. For a detailed account of the structure of Euronext, see Sandrine Hirsch and Vanessa Marquette, “Euronext leads the way for European exchange mergers”, International Financial Law Review (2000) 18
44. Stan H. A. J. Beckers, Lucas J. L. Rijckmans, Yvonne T. M. Stam & Steven E. Storm, “Euronext: a Dutch Perspective”, Journal of International Banking and Financial Law (2001) 323.
45. For a further description of the different planned elements of Euronext, see Daan Lunsigh Scheurleer, “The Netherlands: Settlement and custody of Euronext trades by Euroclear”, International Financial Law Review (2000) 53.
46. In 1999, the Nordic Council published a report which discussed the possibilities for cooperation between the Nordic stock exchanges and the exchanges in Estonia, Latvia, and Lithuania. See TemaNord 1999:576, International Financial Law Review n. 11.
47. For a broader and more critical analysis of a possible co-operation between the stock exchanges in the Baltic Sea Region, see Clausen, Møller, Parum and Sørensen, International Financial Law Review n. 22.In May 2000, the stock exchanges in Estonia, Latvia and Lithuania signed letters of intent to join Norex. The stock exchange in Helsinki (HEX), however, remained outside the co-operation. In May 2001, HEX managed to gain control over the stock exchange in Estonia, and consequently the latter exchange was no longer interested in participating in Norex. Since the stock exchange in Estonia is the largest and most attractive of the three exchanges in the Baltic Sea states, Norex has given up its attempt to include the stock exchanges in Latvia and Lithuania in the alliance.
48. For further discussion, see Hal S. Scott, “Regulation of the relationship between European Union Stock Exchanges: Lessons from the United States”, in: Ferrarini, International Financial Law Review n. 9, at p. 292
49. Steil, in: TemaNord 1999:576, International Financial Law Review n. 11, p. 24
50. Steil, International Financial Law Review n. 8, p. 129.
51. Cf., e.g., the Danish Governmental Report on the Stock Exchange Reform II, 1995/1996 Betcenkning nr. 1290/1995 Börsreform II, vol. 2, p. 28.
52. Deutsche Börse (1993), Amsterdam (1995), Helsinki (1995), Copenhagen (1996), Iceland (1999), and Oslo (2000). Cf., on this development, Marco Onado, “Competition among Exchanges or Financial Systems?”, in: Ferrarini, Betcenkning nr. 1290/1995 Börsreform II n. 9, at p. 238
53. Guido Ferrarini, “Stock Exchange Governance in the European Union”, in: Morten Balling, Elizabeth Hennessy and Richard O'Brien (eds.), Corporate Governance, Financial Markets and Global Convergence (Kluwer Academic Publishers 1998) 139.
54. Cf. Steil, Corporate Governance, Financial Markets and Global Convergence n. 8, pp. 42–43.
55. Recently the Commission has been evaluating whether Eurex, an electronic exchange for financial derivatives set up by Deutsche Börse and SWX Swiss Exchange violated Art. 81 of the EC Treaty. See the notice published in OJ [2000] C 231/2. According to a press release dated 3 January 2001 (IP/02/4) the Commission has approved the alliance by way of a negative clearance comfort letter. Competition law issues were also raised in the planned iX alliance.
56. See further Rumpel and Hammen, OJ n. 23, at pp. 18–19.
57. See also Peter Nobel, “Börsenallianzen und -fusionen”, in: Festschrift für Marcus Lutter zum 70. Geburtstag (Köln 2000) 1485, at p. 1509.
58. Cf. Steil, Festschrift für Marcus Lutter zum 70. Geburtstag n. 8, p. 63.
59. Cf. Ruben Lee, What is an Exchange? The Automation, Management, and Regulation of Financial Markets (Oxford University Press 1998) 61.
60. Cf. Steil, in: TemaNord 1999:576, The Automation, Management, and Regulation of Financial Markets n. 11, p. 26, with respect to Norex, but at the same time pointing out that a similar effect could be achieved by other kinds of cross-border alliances.
61. Cf. Lee, The Automation, Management, and Regulation of Financial Markets n. 38, at p. 71. There are also some more recent examples of alliances based on cross-border listings.
62. See further Peter Nobel, The Automation, Management, and Regulation of Financial Markets n. 35, at pp. 1507–1509.
63. For further discussion, see Nis Jul Clausen and Karsten Engsig Sørensen, “The Regulation of Takeover Bids in Europe: The Impact of the Proposed 13th EC Company Law Directive on the Present Regulation in the EU Member States”, 1 International and Comparative Corporate Law Journal (1999) 169, at pp. 211–217
64. Jan von Hein, “Grundfragen des europäischen Übernahmekollisionsrechts”, Die Aktiengesellschaft (2001) 213–232.
65. Cf. Steil, Die Aktiengesellschaft n. 11, p. 28.
66. Cf. Directive 98/26/EEC, OJ [1998] L 166/45.
67. Cf. Steil, OJ n. 11, p. 29.
68. See also Amir N. Licht, “Stock Market Integration in Europe, CAER” (Discussion Papers, January 1998, on file with the authors) p. 61.
69. See Steil, Discussion Papers n. 11, p. 29, discussing S4 and possible reasons for it failure.
70. Cf. Rüdiger von Rosen, “Europas Börsen im Binnenmarkt”, EuZW(1993) Heft 1 at p. 26.
71. Cf. Licht, EuZW n. 46, at p. 52, mentioning that the problem primarily concerns internationally oriented stock exchanges such as EASDAQ.
72. Contrary to this, in the United States an extensive convergence of rules has been achieved through the common regulatory body, SEC, which issues or approves most of the regulation relevant to the securities markets. On the American development and the possible lessons for the EU, see Scott, EuZW n. 29, at p. 283.
73. Such a solution is advocated by Benn Steil, Competition, Integration and Regulation in EC Capital Markets (Royal Institute of International Affairs 1994) at p. 225.
74. See the proposed regulation, COM (2001) 80.
75. See Uwe H. Schneider, “Internationales Kapitalmarktrecht”, Die Aktiengesellschaft (2001) 269–278, at p. 270.
76. Cf. the report of the Technical Committee of IOSCO, “Supervisory Framework for Markets” (May 1999) p. 12.
77. Cf. Carlo Biancheri, “Cooperation among Supervisory Authorities under the ISD”, in: Ferrarini, “Supervisory Framework for Markets” n. 9, at p. 363
78. Gérard Hertig, “Regulatory Competition for EU Financial Services”, in: Daniel C. Esty and Damien Geradin (eds.), Regulatory Competition and Economic Integration (Oxford University Press 2001) 218–240, at p. 238.
79. See Yannis V. Avgerinos, “Towards a Pan-European Securities Market for SMEs: the Easdaq and Euro. NM Models”, European Business Law Review (2000) 8, at p. 20.
80. On these agreements, see Susanne Bergsträsser, “Cooperation between Supervisors”, in: Ferrarini, European Business Law Review n. 9, at p. 376.
81. For a review of IOSCO's different initiatives, see Annette Althaus, “Principles of Cross-Border Supervision: The Swiss Approach to Enhanced Co-operation in International Financial Services Supervision”, 1 International and Comparative Corporate Law Journal (1999) 125–168.
82. See COM (99) 232, pp. 11–12.
83. Cf. von Rosen, COM n. 47, at p. 27.
84. Some of the problems involved in supervision were considered in the planned iX allience, see Kümpel and Hammen, COM n. 23, at pp. 8–10.
85. Cf. International Market Insight Reports (New York, 3 May 2000).
86. See Beckers, Rijckmans, Stam and Storm, International Market Insight Reports n. 25, at p. 327.
87. For an analysis of the problem, see the Commission in COM (95) 498
88. Ailsa Röell, “Competition between European Exchanges: Recent Developments”, in: Ferrarini, International Market Insight Reports n. 9, at p. 220.
89. See further Licht, International Market Insight Reports n. 46, at p. 52
90. Avgerinos, International Market Insight Reports n. 55, at pp. 14
91. Santiago Hierro Anibarro, “The European New Markets For High-Growth Companies”, 2 European Business Organization Law Review (2001) 365, at pp. 398–400.
92. See further Licht, European Business Organization Law Review n. 46, at pp. 48–52.
93. The importance of local and regional knowledge with respect to markets for growth companies are emphasized by Steil, in: TemaNord 1999:576, European Business Organization Law Review n. 11, at p. 24.
94. Cf. Röell, European Business Organization Law Review n. 64, at p. 220.
95. Cf. Röell, European Business Organization Law Review, at p. 221. By the beginning of 2001, Deutsche Börse extended its regulation on market transparency to Neuer Markt, referring to the need for equal protection of investors.
96. See the bulletin regarding investor protection in the New Economy, released by the IOSCO Technical Committee, May 2000. For a discussion of the need for special regulation for high-growth companies, see Hierro Anibarro, European Business Organization Law Review n. 64, at pp. 390–393
97. Stephen Copp and Bill Maughan, “Innovative high growth companies: the case against special rules”, 22 The Company Lawyer (2001)234–243.
98. Cf. Steil, European Business Organization Law Review n. 8, at p. 60
99. Onando, European Business Organization Law Review n. 31, at p. 230.