A Critical Evaluation of the New EC Financial-Market Regulation: Peaks, Troughs, and the Road Ahead

Abstract:     
The implementation of the European Union's Action Plan for Financial Services (FSAP) is largely complete, though the transposition of relevant legislation into the Member States' legal orders is still pending. The new legislation has significantly revamped the EU's legal and regulatory framework governing financial markets. The Lamfalussy process has been successfully utilized in debating and enacting the most important pieces of the new EC securities legislation. This article provides a critical analysis of the securities Directives passed under FSAP and critically evaluates their impact on EU capital markets and the EU financial services industry. Furthermore, this article sheds light on the evolution of EC financial market regulation and on the most important and intricate points of the new legislation. It explains the reasons that make the new legislation an agent of profound change for EU financial markets in terms of structure, business planning and trading processes. Finally, the article debates the cost of compliance with and enforcement of the new framework and the supervisory and enforcement loopholes created due to the absence of a single regulator for EU financial markets.

Number of Pages in PDF File: 52

Keywords: EU Securities Regulation, Lamfalussy Process, FSAP, Market Abuse Directive, MiFID, Prospectus Directive, Transparency Directive, Regulated Markets, MTFs, Regulation of Broker-Dealers, Public Offers of Securities

JEL Classification: G15, G18, K22

Accepted Paper Series