European Financial Industry: EU court rebuffs UK legal challenge to short-selling law

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Londen City: "The Party Is Over"

he UK government's attempt to limit the extent of European Union power to ban certain financial practices has failed in the courts.

In 2012, the EU passed a law giving it the power to ban short-selling - betting on whether shares or other securities will fall in price - in emergency situations.

The UK challenged the law as a restraint of trade on the City, but the EU's highest court rejected the case.
Britain will not be able to opt out.

EU authorities believe short-selling contributed to financial instability during the region's debt crisis by increasing the volatility of stocks.

Under the new law, the European Securities and Markets Authority (ESMA) can ban short-selling if it thinks the practice threatens the stability of the EU financial system.

Britain has argued that such measures interfere with the efficiency of the financial markets.

The Luxembourg-based Court of Justice said the EU's new powers were "compatible with EU law" and dismissed the UK's legal case "in its entirety".

Read more: BBC News - EU court rebuffs UK legal challenge to short-selling law

European Financial Markets: Europe tightens up financial market rules - but Britain once again "odd man out"

The Europe Union is to tighten regulation of financial markets under a deal to prevent any repetition of the rampant speculation which helped bring down banks and crash the global economy.

After two years of tough talks, the European Parliament and negotiators for the 28 member states agreed a deal in principle that sets new rules to regulate the market, known as MiFID II.

"These new rules will improve the way capital markets function to the benefit of the real economy," said the EU's Financial Markets Commissioner Michel Barnier.

"They are a key step towards establishing a safer, more open and more responsible financial system and restoring investor confidence in the wake of the financial crisis."

Barnier first pushed for the new rules in 2011 at the height of the eurozone debt crisis which was sparked by the 2008 global financial crash.

They aim to curb speculative trading in commodities and to regulate high-frequency trading so as better to protect investors and make the markets less crisis prone.

They will apply to investment firms, market operators and services providing post-trade transparency information in the European Union, a parliament statement said.

They will notably force market players to buy and sell financial instruments on regulated markets comparable to stock exchanges to ensure that all trading is tracked by MiFID.

International aid group Oxfam welcomed the deal but warned of the dangers of exemptions, especially for Britain which is home to one of the world's largest financial markets in London.

"Today's decision marks a good start in tackling 'gambling' on food prices which are a matter of life and death to millions," Oxfam said.

But "the deal is far from perfect," Oxfam said." Unjustified exemptions were granted to powerful lobbies and limits will be set nationally, rather than at the European level.

"There is a real risk, particularly in the UK, of ineffective sky high limits triggering a regulatory race to the bottom between European countries," it said in a statement.

Read more: Europe tightens up financial market rules - Yahoo News

Europe swings left: "it's not only important to solve Europe's financial crises, but also to get rid of those who created it"

"Traders and strategists" saw little respite for non-German debt in coming days with investors worried Socialist Francois Hollande - who won the first round of France's presidential poll on Sunday - might loosen his country's commitment to austerity.

On the political crises in the Netherlands, financial institutions also expressed fear, "until we see a new coalition cobbled together in Holland and signs they are going to take action to cut the budget deficit over the medium-term investors are going to be nervous over Dutch bonds," RIA Capital Markets strategist Nick Stamenkovic said.

Citigroup, a tax payer bailed out "too big to fail financial institution" said: "the euro was caught between Holland and Hollande."

"We suspect that more indications that the euro zone countries are softening their commitment to fiscal targets and that  austerity policies could push sovereign debt yields higher still going forward. The headwinds for the single currency could intensify because more funding difficulties for the euro zone core could undermine the efforts to create a credible firewall for Spain and Italy," Citigroup said in a "fear mongerin"g morning note to its clients.

A French left wing parliamentarian hearing the news of Hollande's victory said, "its not a question that we should not solve Europe's financial crises, but in the process we should also get rid of those who created it" 

EU-Digest

Europe finishes quarter up nearly 7%

European Markets rallied yesterday, ending the quarter up almost 7 per cent. This marked their best first quarter since 2006, following the announcement that euro zone finance ministers had agreed to a temporary increase to the euro zone’s rescue fund, the European Financial Stability Fund.

For more: Europe finishes quarter up nearly 7% - The Irish Times - Sat, Mar 31, 2012