European Capital Market Law Research Articles

Central Counterparties’ Insolvency and Resolution – The New EU Regulation on CCP Recovery and Resolution

With its new Regulation on the Recovery and Resolution of Central Counterparties, European Capital Markets Law has filled an important void in the regulatory framework for the operation of central counterparties, which has been established with the EU Markets Infrastructures Regulation (EMIR) as early as 2012. With a comprehensive set of preventive and reactive provisions for the restructuring of central counterparties, the new instrument clearly takes a bold step. The provisions build on existing international standards, but are far more granular than these. The present paper assesses the underlying policy and the technical content of the Regulation in the light of the post-financial crisis literature on the systemic relevance of financial market infrastructures.

Data Reporting: Market Structures and Regulatory Framework

The European legislature has identified weaknesses in the functioning and transparency of financial markets as major shortcomings of the regulatory framework under MiFID I. The new MiFID II/MiFIR regime essentially addresses these identified deficits by means of three regulatory measures: First, it considerably extends the scope and increases the stringency of the obligations with regard to pre- and post-trade transparency with a view to improving the quality of pre- and post-trade transparency data. Second, it instigates a shift towards increased trading on regulated trading venues or on other regulated platforms (more extensive market regulation and trading obligations) and, third, it extends the scope of reporting obligations vis-a-vis the supervisory authorities to enable better monitoring of the financial markets. The already extensive Level 1 requirements have been further specified by numerous pieces of highly detailed Level 2 legal acts. In addition, ESMA has already issued several guidelines and Q&As to harmonize supervisory practice. The resulting network of regulations poses immense challenges for legal practice - as is increasingly characteristic of European capital market law today. The paper sets out to shed some light on the subject.

Pecuniary Sanctions Against Issuers in European Capital Market Law: Harming the Protected Investors?

There is a wide consensus in European capital market law that a sound legal framework for the financial sector should rest on a strong supervisory and sanctioning regime. According to this rationale and following the paradigm of competition law, the new legal framework in European capital market law provides for high-magnitude pecuniary sanctions. The new sanctioning regime does not entail special provisions for issuers. However, sanctions imposed on legal entities are of a higher magnitude than sanctions imposed on natural persons. We claim that the imposition of high-magnitude pecuniary sanctions on issuers for violations of capital market law provisions as such does not have the deterrent effect that it is thought to have and, under specific circumstances, can work against the protection of investors. Moreover, the sanctioning provisions of competition law must be examined carefully before being considered as a paradigm for the structure of sanctions against issuers under capital market law. Furthermore, we claim that in cases where innocent investors are harmed, capital market law should resolve the dilemma between entity and manager liability by choosing the latter.

Private Enforcement in the Realm of European Capital Markets Law Revisited and the Case of Credit Rating Agencies from the Perspective of European and German Law

This treatise revisits the debate on private enforcement in the realm of capital markets law from the European and German perspective. It has been inspired by and shall contribute to the wider debate on whether or not financial markets regulation and civil liability in European law have been steering a more coordinated course. The treatise introduces at the outset some vital aspects of the broader debate on the relationship of capital markets law and private law from the German perspective. The treatise then turns to the European civil liability regime for credit rating agencies (CRAs). The topic of this treatise thereby interweaves two realms of law: European capital markets law as an integral part of European financial markets law and national private (international) law. The treatise explores the efficiency and effectiveness of the European civil liability regime for CRAs in the European Union (Union) with a view to its design and implementation. It shows that the European civil liability regime for CRAs in the Union is a specific example of an ill-conceived private enforcement tool in the realm of European capital markets law. The complexity of its design is explored firstly from the perspective of the law in books. In highlighting the torso design problem of the European civil liability regime for CRAs focus lies on the role of private international law. Secondly – as to the perspective of the law in action – the approach of German courts is sketched to illustrate the challenge the national (German) judiciary faces in context with the civil liability of CRAs. The torso design of the European liability regime for CRAs appears to render it an alien concept rather than one fitting easily into the canon of (national) civil liability norms. The treatise concludes with a question rather than a response to the question on whether financial markets regulation and civil liability in European law have been steering a more coordinated course: Why not navigating better next time?

Financial Incentives for Whistleblowers in European Capital Markets Law? Legal Policy Considerations on the Reform of the Market Abuse Regime

The European Commission has recently released a Proposal for a Regulation on market abuse, to increase investor confidence and market integrity in European capital markets law. One of its most innovative elements involves allowing Member States to provide financial incentives to whistleblowers who report cases of market abuse. In this, the Commission has apparently taken inspiration from the US legislation which with the Dodd Frank Act of 2010, significantly expanded its whistleblower reward program. This article examines both the US and the European regulations, and evaluates the advantages and disadvantages of offering financial incentives to encourage informants to blow the whistle. Finally, it looks at the potential structure of a reward program, examining the balance required between external rewards and internal company compliance processes.

Financial Incentives for Whistleblowers in European Capital Markets Law

The European Commission has recently released a Proposal for a Regulation on market abuse, to increase investor confidence and market integrity in European capital markets law. One of its most innovative elements involves allowing Member States to provide financial incentives to whistleblowers who report cases of market abuse. In this, the Commission has apparently drawn inspiration from the US legislation, which with the Dodd Frank Act of 2010, significantly expanded its whistleblower reward programme. This article examines both the US and the European regulations, and evaluates the advantages and disadvantages of offering financial incentives to encourage informants to blow the whistle. Finally, it looks at the potential structure of a reward programme, examining the balance required between external rewards and internal company compliance processes.

Whistleblower Bounties in European Capital Markets Law?

Whistleblower Bounties in European Capital Markets Law?

Towards a Uniform European Capital Markets Law: Commission Proposals to Reform Transparency

The European Union has had a uniform legal framework to transparency of major holdings and financial instruments since 2004. These provisions are to be reformed. In October 2011, the European Commission presented a proposal for a Directive to amend the Transparency Directive. This paper analyses the draft and puts it in context. It also looks at the Commission’s stated aim to strengthen the disclosure regime and give it a more European emphasis. The proposal could represent a further move towards codification of European capital markets law.

Towards a Uniform European Capital Markets Law: Proposals of the Commission to Reform Market Abuse

The European Union has had a uniform legal framework to combat market abuse since 2003. These provisions are to be reformed. In October 2011, the European Commission presented proposals for a Regulation on Insider Dealing and Market Manipulation and a Directive on Criminal Sanctions. This paper analyses the drafts and puts them in context. It also looks at the Commission’s stated aim to strengthen the market abuse regime and give it a more European emphasis. The proposals could represent a further move towards codification of European capital markets law.

Stoneridge and Its Impact on European Capital Market and Consumer Law – Is There a Sanction for Aiding and Abetting a False or Misleading Financial Statement in European Capital Market Law? –

The recent decision Stoneridge Investment Partners, LLC v. Scientific Atlanta, Inc. of the U.S. Supreme Court was even before it was published exposed to a severe debate about the future of the regulation of security fraud under Sec. 10 (b) Securities Exchange Act. Especially outside of the United States it was feared that a broad interpretation of the U.S. Supreme Court would lead to a de facto worldwide application of Sec. 10 (b) Securities Exchange Act which would have had a severe impact especially on transatlantic business relations. Whereas the case and the decision was so far mainly discussed from an American perspective the following case note will examine the very same question under European capital market law and its impact on the discussion in Europe on the introduction of a European style class action.

Strict Liability: A Comment

WITHIN the last year there have appeared several major articles' that, while otherwise extremely diverse, share a strong preference (in one case implicit) for using the principle of "strict liability" to resolve legal conflicts over resource use.2 I shall argue in this comment that the authors of these articles fail to make a convincing case for strict liability, primarily because they do not analyze the economic consequences of the principle correctly.

A Theory of Strict Liability

A Theory of Strict Liability