Pan-European Securities Markets: Policy Issues and Regulatory Responses

Abstract

This paper shows the complexity of some policy issues involved in the reform of European securities regulation and the difficulties encountered in formulating adequate regulatory responses. After reviewing the main criteria which support a claim for securities regulation harmonisation, I analyse the limits of the new institutional structure suggested by the Lamfalussy report. I then examine the European Commission's orientations as to the adoption of high level principles for regulated markets. I apply the results of my previous research in this area to criticise the Commission's proposals concerning transparency obligations and the treatment of ATS and internalisation of orders. I conclude that, on the whole, the proposed principles would not significantly improve the conditions for the growth of pan-European trading systems. I also examine the proposed prospectus directive, in the light of harmonisation of the disclosure standards. Prospectus reform should have a positive impact on the primary markets, by reducing transaction costs and regulatory obstacles to cross-border public offers of securities. However, it is not certain that such a reform will be sufficient to achieve far-reaching changes in current practices of domestic offers and international style offerings. Moreover, the proposed directive would not substantially affect global offers, particularly those concerning securities issued by third countries companies. In addition to these observations, I conclude that in any case the draft directive should be amended as to the scope of the prospectus requirement and the preference for issuer domicile over issuer choice.