Governing Financial Services in the European Union: Banking, Securities and Post-Trading by Lucia Quaglia

Author:Lucia Quaglia [Quaglia, Lucia]
Language: eng
Format: epub
Tags: International Relations, Public Policy, Political Science, Economic Policy, General
ISBN: 9781136998164
Google: zSLJBQAAQBAJ
Goodreads: 17586234
Publisher: Routledge
Published: 2010-02-25T00:00:00+00:00

Conclusion

This chapter has examined the governance of securities markets in the EU, arguing that the pace of regulatory activity quickened after the FSAP and the setting up of the Lamfalussy framework. The four directives passed and their implementing measures concerning securities trading were designed to increase financial market integration in the EU substantially, through de-regulation at the national level, re-regulation at the EU level, convergence of supervisory practices and improved cooperation among national supervisors.

In the making of these directives, but especially in the Prospectus Directive and the MiFID, there were different preferences among, and in some cases within, the member states, and so there were strong intergovernmental negotiations as well as intragovernmental negotiations in some countries, first and foremost Germany. This also meant that the final outcomes were often rather ‘odd’ compromises (e.g. the home country supervisory approach for shares but not for bonds in the Prospectus Directive, the definition of ‘liquid shares’ and ‘standard market size’ in the MiFID), or issues were left open, to be decided later on, as the devil is in the details.

In some cases, the shortcomings of the solutions adopted became apparent only when the directives were implemented. For example, the ‘simplified’ ‘European prospectus’ that was the objective of the Prospectus Directive was not particularly simplified, because the directive was excessively convoluted. Several policy-makers and many stakeholders called for its revision shortly after it was implemented (see European Securities Markets Expert Group 2007). In other cases, the problem was the excessive use of national discretion and/or gold-plating by the national authorities. Finally, the implementation stage brought new stakeholders into the policy process (e.g. assets managers and distribution industry in the case of the MiFID). It also showed the linkage between directives, as, for instance, undertakings for collective investment in transferable securities had been overlooked during the negotiation of the MiFID and needed to be addressed in the revision of the Undertakings for Collective Investment in Transferable Securities Directive.

Securities markets regulation has been the area of most intense EU activity in the 2000s, partly because market integration had lagged behind, partly because securities dealing and technical innovation in this field have become more important. The next chapter focuses on the post-trading activities clearing and settlement of securities, as well as payments systems – the ‘plumbing’ of the EU financial markets – on which a large part of EU regulatory activity focused after 2004, once the main directives on securities trading had been passed.

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