The new European financial markets legal framework: a real improvement? An analysis of financial law and governance in European capital markets from a micro- and macro-economic perspective

Abstract

The recent financial crisis has highlighted the need for a global response to the shortcomings of the international financial system. In this context and following the G20 recommendations, the European Commission has established new supervisory authorities dedicated to the task of overseeing systemic risk and ensuring more harmonized supervisory powers. This article addresses both the prevention role of this new structure which is reflected through the creation of the European systemic Risk Board (ESRB) and the supervision role which is reflected through the establishment of the European Supervisory Authorities (ESA) and particularly the European Securities Markets Authority (ESMA). This article identifies and comments the peculiarities of these new institutional bodies in Europe by providing a critical appraisal of their roles and powers against the background of Member State powers, while identifying main legal, political and economical implications that arise in different aspects including the oversight of Credit Rating Agencies (CRA) as mechanisms of global governance. The article contends that the new structure is a clear improvement for European Capital Markets, although several legal, political and practical weaknesses remain, mostly as a result of compromise between Member states, these issues will need to be addressed through the on-going process of the EU.