EU watchdog should not have power to ban short-selling
By Huw Jones
LONDON (Reuters) - Britain has won backing to curb the power of the European Union market watchdog to ban short-selling in a boost to a campaign against the concentration of financial regulation in Brussels at the expense of the City of London.
An adviser to the EU's top court said in an opinion that such an emergency power, part of an EU law introduced last year, went beyond what the watchdog could do under the EU treaty.
"The emergency powers granted by that article to the European Securities and Markets Authority to intervene in the financial markets of member states so as to regulate or prohibit short selling go beyond what could be legitimately adopted as a harmonizing measure necessary for the establishment or functioning of the internal market," European Court of Justice Advocate General Niilo Jaaskinen said in a statement.
Jaaskinen said the article in the EU's short-selling law granting ESMA such power should be annulled.
The power should have been based on a different part of the EU treaty which require decisions to be taken on the basis of unanimity among member states, Jaaskinen said.
Alexandria Carr, a regulatory lawyer at Mayer Brown, said if the court endorsed the opinion, it would have a big and immediate effect on several financial rules being negotiated.
Plans for an EU body to close failing banks contain a provision for overriding national decisions, Carr said.
The advocate general said ESMA's other powers were in line with the relevant EU constitutional rules. Continued...